WSJ: OIL FUTURES: Nymex Crude Falls Sharply After U.S. Oil Data
By David Bird
NEW YORK--Crude oil futures prices fell sharply after U.S. government data reported a surprise large build in inventories and an 11-year low in gasoline demand during the peak summer driving season.
The Energy Information Administration said crude oil stocks rose 2.7 million barrels in the week ended July 20, while analysts surveyed by Dow Jones Newswires expected a drop of 800,000 barrels. The rise in crude stocks followed declines of 9.9 million barrels over the past four weeks.
"There is nothing you can say that is anything but bearish from this report," said Andy Lebow, a vice president of energy futures at Jeffries Bache. "This has put the market in a tailspin."
The EIA data overall showed inventories well above expectations, but it closely tracked figures released late Tuesday afternoon by the American Petroleum Institute, a trade group.
Ahead of the widely watched EIA data, crude prices were unchanged, at $88.50 a barrel. But aggressive selling followed the 10:30 a.m. EDT release, with September crude oil futures prices down 50 cents in a blink, in accelerating sell-off.
The contract hit a low of $86.84 a barrel, a drop of 1.9%, or $1.66, before finding its footing.
Mr. Lebow said crude looks likely to challenge soon mid-month lows of near $84 a barrel.
September ICE North Sea Brent crude followed in the wake, dropping 80 cents, to $102.62 a barrel.
Reformulated gasoline blendstock futures for August delivery had shed 11.82 cents over the two previous trading sessions as the end of a sluggish summer driving season nears. The contract was 1.5% lower again Wednesday ahead of the data and was pushed lower on news of a sharp, unexpected rise in inventories.
RBOB gasoline for August delivery was down 3.1% recently, at $2.7356 a gallon, off 8.8 cents.
The EIA said gasoline stocks rose by 4.1 million barrels, the biggest weekly rise since Dec. 2, 2011. Analysts had called for a drop of 500,000 barrels in gasoline stocks in the week.
Demand for gasoline inched higher in the week, but was 3.8% below a year ago, and at the weakest level for the week in 11 years, the EIA data show.
Stocks of distillate fuel (diesel/heating oil) rose 1.7 million barrels, more than the expected 1.1 million-barrel rise.
August heating oil futures fell 0.9%, or 2.61 cents, to $2.7983 a gallon.
