MW: Oil keeps loss after surprise supply increase `
Analysts had expected weekly crude inventories to be unchanged
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures remained lower Wednesday after the government’s weekly data on U.S. crude inventories showed an unexpected increase in supplies.
Oil for November delivery CL1X -1.34% dropped 78 cents, or 0.9%, to $83.68 a barrel in the New York Mercantile Exchange. Losses deepened after the inventories report, but prices recently found a firmer footing.
The contract rose to its highest settlement in nearly a week on Tuesday, also notching its biggest one-day percentage gain in four months as investors cheered reports that euro-zone officials are planning to beef up their bailout fund to contain the region’s sovereign-debt crisis.
Earlier Wednesday, European Commission President Jose Manuel Barroso said he expects the European Central Bank to do whatever is necessary to ensure financial stability in the euro zone — a statement that played into Wall Street’s hopes for a gradual resolution of the sovereign-debt crisis.
Markets “seem to believe [the Europeans] are onto something,” analysts at Cameron Hanover said in a note to clients Wednesday. “Risk is back on the menu … and everyone is hungry.”
Meanwhile, the Energy Information Administration reported an increase of 1.9 million barrels in oil supplies in the week ended Sept. 23.
The EIA also reported that gasoline supplies rose 800,000 barrels and that distillates increased 100,000 barrels on the week.
Analysts polled by Platts had expected oil inventories to be unchanged. They also had anticipated increases of 1.2 million barrels for gasoline inventories and 1 million barrels for distillates.
The EIA report was “a little on the bearish side,” said Tariq Zahir, a managing member with Tyche Capital Advisors in New York. The trend of increasing inventories “will continue and accelerate in the upcoming weeks,” he added.
“Further support of the bearish case is the lack of hurricane activity or shutdowns in the Gulf of Mexico,” he said. “We feel crude will come under substantial pressure in upcoming weeks. Total demand is continuing to go down, coupled with the U.S. economy still on shaky ground and the U.S. jobs picture not looking any better anytime soon.”
October gasoline RB1V +0.07% rose less than a penny, or 0.1%, to trade at $2.70 a gallon. Heating oil for the same month’s delivery HO1V -0.10% held to gains, up less than 1 cent, or 0.2%, to $2.88 a gallon.
