March 28, 2012 / 5:38 PM / in 6 years

Crude ends lower on inventory rise, reserves talk

NEW YORK (Reuters) - Crude futures fell on Wednesday as a jump in crude inventories in the United States and the prospect of a release of U.S. and some European strategic reserves sent oil prices into retreat.

A motorist holds a fuel pump at a Gulf petrol station in London in this April 18, 2006 file photo. REUTERS/Luke MacGregor/Files

U.S. crude stocks rose by 7.1 million barrels last week, the Energy Information Administration said, more than forecast. <EIA/S>

Gasoline inventories declined by a more-than-expected 3.54 million barrels and distillate stocks fell 700,000 barrels.

Ahead of weekly reports on U.S. oil inventories, crude stocks were expected to have risen 2.6 million barrels last week, a Reuters survey of analysts showed.

Distillate inventories were expected to be down 100,000 barrels, while gasoline stocks were forecast to be down 1.3 million barrels.

The prospect of a release of strategic oil reserves from the United States and some European nations also pressured oil.

France is in contact with Britain and the United States on a possible release of strategic oil stocks to push fuel prices down, Le Monde daily said, citing presidential sources.

A White House official reiterated that the United States was considering a reserve release but no decisions had been made.

“As we have said repeatedly, while this is an option that remains on the table, no decisions have been made and no specific actions have been proposed,” White House spokesman Josh Earnest told reporters.

FUNDAMENTALS

On the New York Mercantile Exchange, May crude fell $1.92, or 1.79 percent, to settle at $105.41 a barrel, below the 30-day average of $106.32, and having traded from $104.67 to $106.94.

Saudi Arabia is set to use a record number of drilling rigs this year as it ramps up production, in the face of possible supply shortages due to Western sanctions on Iran.

Goldman Sachs said it was shifting its recommendation on commodities to “neutral” from “overweight” on a near-term horizon, as most commodity markets including copper, crude oil and soybeans have reached the brokerage’s near-term targets.

Saudi Oil Minister Ali al-Naimi blasted “irrationally” high oil prices in a rare opinion piece in the Financial Times, but offered no sign that the kingdom was moving to boost output.

MARKETS NEWS

Fiscal year-end repatriation flows supported the yen across the board, while the euro was little changed against the dollar after a warning from an ECB official about resolving the debt crisis. <USD/>

U.S. stocks fell as sliding oil and metals prices gave investors a reason to sell. Commodity-related shares led the decline. .N

Copper fell more than 2 percent, caught up in the broad retreat in risk assets, after disappointing U.S. durable goods data cast doubt about the recovery pace in the world’s largest economy. <MET/L>

UPCOMING DATA/EVENTS

U.S. initial jobless claims weekly data due at 8:30 a.m. EDT (1230 GMT) on Thursday.

U.S. Energy Information Administration natural gas storage data due at 10:30 a.m. EDT (1430 GMT) on Thursday.

SETTLE NET PCT LOW HIGH CURRENT DAY AGO

CHNG CHNG VOL VOL CLc1 105.41 -1.92 -1.8% 104.67 106.94 297,208 209,036 CLc2 105.96 -1.89 -1.8% 105.21 107.45 89,453 53,510 LCOc1 124.16 -1.38 -1.1% 123.53 125.18 205,136 211,602 RBc1 3.3955 -0.0101 -0.3% 3.3439 3.4026 26,837 28,097 RBc2 3.3621 -0.0243 -0.7% 3.3250 3.3716 70,474 51,665 HOc1 3.2079 -0.0107 -0.3% 3.1886 3.2134 15,053 28,049 HOc2 3.2222 -0.0138 -0.4% 3.2038 3.2323 51,186 49,721

TOTAL MARKET VOLUME OPEN INTEREST

CURRENT Mar 27 30D AVG Mar 27 NET CHNG

CRUDE 543,608 384,878 637,424 1,562,147 -12,242

RBOB 200,296 146,728 143,998 380,676 -4,991

HO 126,236 128,874 142,045 290,696 -714

Reporting by Robert Gibbons; Editing by David Gregorio

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