Oil slips following big U.S. gasoline stock build

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Oil futures fell slightly on Wednesday after government data showed U.S. fuel stocks rose sharply last week, a sign of ample supply in the world's top consumer of oil.

U.S. oil futures rose early, then turned negative after U.S. Energy Information Administration data showed gasoline inventories rose 7.4 million barrels last week. That followed a build of nearly 30 million barrels in the final quarter of 2012. Stocks of crude and distillate fuels also rose, data showed.

"The report is solidly bearish with the large builds in refined products, especially gasoline," said John Kilduff of hedge fund Again Capital in New York.

U.S. crude futures for February delivery settled 5 cents lower at $93.10 a barrel, while Brent futures fell 18 cents to $111.76 a barrel.

U.S. RBOB gasoline fell nearly 2 cents a gallon.

The U.S. dollar gained almost 0.3 percent against a basket of foreign currencies. Oil prices often fall when the dollar strengthens since dollar-denominated commodities like crude become more expensive for holders of foreign currencies.

Investors shrugged off some potentially more bullish signals for energy markets in the near future.

The Bank of England and European Central Bank policymakers began two-day meetings. Investors will watch for hints that the ECB may lower interest rates in 2013 to pull the regional economy out of recession.

Traders also await quarterly economic data from China later this month, which is expected to confirm revived economic growth in the world's top consumer of energy resources.

U.S. equities markets advanced, with the S&P 500 index rising 0.2 percent a day after aluminum company Alcoa Inc. reported better-than-expected fourth quarter revenues, kicking off the quarterly U.S. corporate earnings season.

RISING U.S. OIL PRODUCTION

The EIA's weekly report also said U.S. crude production last week rose above 7 million barrels per day for the first time since 1993.

The EIA had said in a separate report on Tuesday that U.S. crude oil production will rise by the largest amount on record in 2013, and is set to soar 25 percent over two years.

The rapid increases underscore how advances in horizontal drilling and more hydraulic fracturing in shale and tight oil fields are boosting supply.

(Additional reporting by Robert Gibbons in New York, Simon Falush in London and Ramya Venugopal in Singapore; Editing by Andrew Hay)



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