April 18, 2012 / 7:14 PM / 5 years ago

Oil falls as US inventories rise a fourth week

NEW YORK (Reuters) - Oil futures fell on Wednesday as supply concerns eased after data showing a fourth straight week of inventory build in the United States.

U.S. crude stocks jumped 3.9 million barrels in the week to April 13, data from the U.S. Energy Information Administration (EIA) showed, substantially exceeding analyst expectations. Over the past month, supplies have swelled nearly 22.8 million barrels, the biggest four-week build since February 2009.<EIA/S>

The build helped offset ongoing supply concerns due to a string of disruptions across the globe this year, as well as worries about the potential loss of oil from Iran due to EU and U.S. sanctions against Iran set to take effect this summer.

Oil also came under pressure along with other commodities from resurgent worries about the euro zone debt crisis. The Thomson Reuters-Jefferies CRB Index .CRB fell nearly 1 percent on the day.

Investors in oil and other commodities are sensitive to the region’s economy as they balance its oil demand prospects against any potential losses from OPEC member Iran arising from U.S. and European Union sanctions set to take effect this summer.

In London, ICE Brent for June delivery settled at $117.97 a barrel, dropping 81 cents, marking the lowest close for front-month Brent since February 13. It hit a session low of $116.70, threatening to fall below its 100-day moving average of $116.31.

U.S. May crude, which expires on Friday, settled at $102.67, falling $1.53. It skidded to a session low of $102.19, moving toward the 100-day moving average of $101.86. June crude closed at $103.12, down $1.52.

Brent crude’s volume outpaced that of U.S. crude, rising almost 22 percent above its 30-day average, Reuters data showed. U.S. crude trading volume was up 4 percent above its 30-day average.

Further pressure on crude came as U.S. gasoline futures fell sharply on persistent demand worries, even though EIA data showed gasoline inventories fell 3.7 million barrels last week, their ninth consecutive week of drawdowns.

U.S. gasoline demand over the past four weeks was 8.74 million barrels per day (bpd), down 2.8 percent from a year ago, the EIA report showed.

U.S. May gasoline futures fell more than 3 cents to settle at $3.2027 a gallon. In early trade, it dropped nearly 2 percent to a session low of $3.1411 a gallon, the lowest since February 29 for front-month RBOB and well below its 50-day moving average of $3.2361.

U.S. gasoline’s crack spread -- gasoline’s value against the price of crude oil -- narrowed more than $2 early in the session to $30.65 a barrel before recovering to close at $31.84, slightly wider than Tuesday’s close at $31.63.

“Despite the drawdown, demand for gasoline remains anemic,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

“Bear in mind also that U.S. gasoline is moving lower with global benchmark Brent crude,” he added.

Traders were also closely watching developments in talks between Iran and the West of Tehran’s nuclear program.

Iran and six world powers have decided to reconvene on May 23 in Baghdad after talks about Iran’s disputed nuclear program resumed last Saturday following a long hiatus. Iran has said it is ready to resolve issues raised by the West that has spawned tensions leading to the jump in oil prices last month to the year’s highs.

MIDWEST GLUT, GASOLINE DRAW

June Brent crude’s premium against its counterpart U.S. crude contract fell to a session low of $12.99, narrowest since February 1, before recovering to close at $14.85, from $14.14 on Tuesday.

The transatlantic spread narrowed sharply this week on news that the planned reversal of the Seaway pipeline flow from the Midwest to the U.S. Gulf Coast -- a move aimed to ease the glut of oil in central United States -- in mid-May, sooner than expected.

Brimming crude oil inventories at the Cushing, Oklahoma, delivery point for U.S.-traded crude oil futures, have pressured U.S. crude futures, also known as West Texas Intermediate, in recent months. <ID: nL2E8FG4IQ>

Last week, crude oil stored there rose 592,000 barrels to 41.18 million barrels, the highest level since May, the EIA report showed.

Additional reporting by Robert Gibbons in New York; Jessica Donati in London; Editing by Matthew Robinson, Marguerita Choy and David Gregorio

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