MW; Oil falls as U.S. inventories rise more than expected
Oil futures fell Wednesday after government data showed U.S. crude inventories rose more than expected last week as demand weakened.
Crude inventories increased 3.7 million barrels to 370.6 million barrels, the highest level in nearly 19 years, the Energy Information Administration reported. Analysts surveyed by Platts had expected a buildup of 3 million barrels.
Late Tuesday, the American Petroleum Institute, which uses a different methodology than the EIA, reported inventories declined 1 million barrels. The report, together with rising U.S. stocks, had helped crude move higher in Wednesday's earlier trading.
On the New York Mercantile Exchange, crude for June delivery recently fell 70 cents, or 1.4%, to $47.85 a barrel. It was up 0.5% before the inventories data.
"This [government] data are too bearish for the market to ignore. If this doesn't chase the bulls back into the barn there is little that will," said James Williams, an economist at energy research firm WTRG Economics.
The EIA, the statistics arm of the Energy Department, also reported gasoline inventories rose 800,000 barrels and distillate stockpiles, which include heating oil and diesel, rose 2.7 million barrels. Analysts had expected a decline in both gasoline and distillate inventories.
The API reported that gasoline supplies rose by 107,000 barrels and distillate stocks increased by 458,000 barrels.
The EIA report also showed that weak demand triggered the inventories buildup. Total demand for petroleum products in the past four weeks fell 6.5% from a year ago. Among them, gasoline demand fell 0.4% while distillate consumption slumped 9.4%.
U.S. refineries operated at 83.4% of their operable capacity last week, higher than a week ago but remaining at a lower range.
In other energy trading, May reformulated gasoline fell 2.57 cents, or 1.8%, to $1.3887 a gallon and May heating oil dropped 2.59 cents, or 1.9%, to $1.3219 a gallon.
May natural gas futures gained slightly to $3.514 per million British thermal units.
In other markets, U.S. stocks reversed earlier losses after the Federal Housing Finance Agency index of home prices climbed in February. Treasury Secretary Timothy Geithner's speech also helped stocks.
Defending the steps that the Obama administration and other nations have taken to combat the global recession, Geithner said in a speech to the Economic Club of Washington "The actions now in place and in the pipeline offer the strongest basis for confidence that we will begin to lay the foundation for global recovery."
