NEW YORK (Reuters) - Global oil markets tumbled on Wednesday, with U.S. crude futures settling down 4 percent after bullish impact from lower crude inventories was offset by large gasoline builds that raised concerns about high autumn fuel supplies.
Also weighing on crude were Colonial Pipeline’s efforts to fix an outage on one of its lines that had been supporting prices of gasoline, and the larger oil complex, since Tuesday.
Brent, the global benchmark for oil, LCOc1 settled down $1.33, or 2.7 percent, at $47.75 a barrel.
U.S. crude CLc1 slumped $1.88, or 4.1 percent, to settle at $44.48.
Gasoline RBc1 finished down 2 percent after hitting two-week highs earlier in the day.
Crude prices had initially rallied 2 percent, with Brent briefly peaking above $50, after the U.S. government reported a drawdown of about 2 million barrels for a second week in a row. [EIA/S]
“The crude numbers were not a big surprise in any way,” said Tariq Zahir of Tyche Capital Advisors in Laurel Hollow, New York.
“A draw we did see but there was also a bigger-than-expected build in gasoline. The bottom line is we think any rallies, if we do see them, will be short lived and we will sell into them,” said Zahir, an oil bear.
Analysts polled by Reuters had forecast a 533,000-barrel drop last week.
The EIA said gasoline stockpiles rose 1.4 million barrels, compared with the Reuters poll which called for a 819,000-barrel gain.
On the East Coast, distillate inventories rose to 59 million barrels, which according to the EIA was the highest since 2011 for this time of year.
Distillates include fuel oil and diesel. The East Coast is home to the New York Harbor, which is delivery point for U.S. gasoline RBc1 and ultra-low sulfur diesel (ULSD) HOc1 futures.
The high distillate stockpiles topped the concerns of some traders, worried about weak motor fuel consumption from the fall season, which began on Wednesday, through winter.
For others, upcoming maintenance at most U.S. refineries also meant less crude processing.
“While gasoline inventories will see maintenance-sponsored dips in coming weeks, crude will go the other way,” said Matt Smith, director of commodity research for ClipperData, an energy data provider in New York.
Colonial Pipeline said it expects to restart by 6 p.m. EDT (2200 GMT) its Line 3 and 4 pipelines, reported shut since Tuesday afternoon. Line 3 alone has a capacity to carry 850,000 barrels of gasoline and distillates from North Carolina to Colonial’s New Jersey hub in Linden.
Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Meredith Mazzilli and Lisa Shumaker