By Jessica Summers
Oil fell the most in more than two weeks after U.S. crude and gasoline inventories expanded more than expected.
Crude and gasoline futures slid for a second day in New York on Wednesday. U.S. stockpiles of oil in tanks and terminals rose more than most analysts in a Bloomberg survey expected, while gasoline reserves swelled at four times the predicted rate. Helping to feed the gain in crude stockpiles was yet another increase in domestic crude output to yet another record.
Traders are focused on the “higher-than-expected builds in both gasoline and oil,” Rob Thummel, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. Larger gasoline inventories “will put pressure” on the profitability of making the fuel.
Meanwhile, American refiners toggled back processing rates for a third week during seasonal maintenance work that takes key units offline, reducing demand for crude.
The U.S. crude benchmark posted its first monthly decline since August. Crude output by the Organization of Petroleum Exporting Countries rose by 130,000 barrels a day in February amid higher production from Libya, Nigeria and Venezuela, according to JBC Energy. Meanwhile, U.S. explorers have been pumping more than 10 million barrels a day for weeks and are on course to surpass Russia as the world’s largest source of oil.
West Texas Intermediate for April delivery declined $1.37, or 2.2 percent, to settle at $61.64 a barrel on the New York Mercantile Exchange. Total volume traded was about 9 percent above the 100-day average.
Brent for April settlement, which expires Wednesday, slid 85 cents to end the session at $65.78 on the London-based ICE Futures Europe Exchange. The more-active May contract fell $1.79 to settle at $64.73. Front-month Brent futures traded at a $4.14 premium to April WTI.
Gasoline futures fell 2.5 percent to settle at $1.7577 a gallon. The gasoline crack spread, a rough measure of the profit from refining crude into the fuel, tumbled as much as 5.9 percent.
Last week’s 3.02 million-barrel increase in U.S. crude inventories exceeded seven of the 10 estimates from analysts in a Bloomberg survey. Gasoline stockpiles swelled by 2.48 million barrels, compared with an average estimate of 600,000 barrels.
“The underlying story is that seasonally we are in a weaker period of time and it’s going to continue to get weaker before it gets stronger,” Ed Morse, global head of commodities research at Citigroup Inc., said by telephone. “It would have been a surprise to see prices go up with a slightly more bearish set of data points.”
Other oil-market news:
- Chevron Corp.’s youngest director questioned the future of an industry the world’s third-largest oil explorer helps lead.
- Colombia’s Ecopetrol is considering starting its own oil hedge for the first time in over a decade.
- The bounty from booming shale fields and rising crude prices are translating into low unemployment rates, mostly in Texas and North Dakota, home to the prolific Permian and Bakken basins.