U.S. crude-oil futures dropped to a four-month low Wednesday after government data showed inventories rose more than expected last week.
The Energy Information Administration said crude oil stocks rose by 4.1 million barrels, compared with forecasts for a 2.2 million-barrel increase.
Crude stocks have gained 28.2 million barrels, or 7.9%, in the past six weeks as refiner demand has dropped amid seasonal maintenance work and unplanned outages. At 383.9 million barrels, stocks are the highest since June 21, but are the most ever for this time of year on EIA weekly data, which began in 1982. Stocks are near the highest end-October level since 1930, EIA data show.
"There is just lots and lots of crude around," said Kyle Cooper, analyst at IAF Advisors in Houston.
Light, sweet crude for December delivery settled 1.5%, or $1.43 lower, at $96.77 a barrel, the lowest price since June 28.
Nationwide, refineries posted the first significant gain in crude oil processing since mid-September. But in the key Gulf Coast region, which accounts for 51% of the country's refinery capacity, crude runs dropped to the lowest level since mid-March.
Lower runs in the Gulf allowed regional crude stocks to rise 2.8 million barrels to the third highest level on EIA data, beginning in 1990.
Analysts said the reduced need for crude oil from Gulf Coast refiners caused stocks of crude oil at Cushing, Okla., to rise by 2.2 million barrels in the week, the biggest one-week rise since December 2012. Cushing stocks now are the highest since Aug. 23, after dropping in recent weeks to the lowest level since mid-February 2012.
The Cushing terminal complex is the delivery point for the Nymex crude oil futures contract, and changes in inventories can hold sway over the U.S. benchmark price and its relationship to Brent crude, the global benchmark.
Through new pipeline links and greater use of rail and truck shipments, Gulf Coast refiners have increased use of domestic crude supplies, which previously had hit a logjam in the Midwest, and they are substituting it for imported oil.
ICE Brent crude oil for December settled Wednesday, at $109.86 a barrel, the highest level since Oct. 22, and up 85 cents on the day. Brent gained support on disruptions in Libya oil output, which has dropped due to domestic disputes to below 300,000 barrels a day in recent days, or about 1 million barrels a day below the second quarter average.
The Brent premium to the Nymex contract widened to $13.09 a barrel, the most since April 2, from $10.81 a day earlier.
Traders said oil futures weren't affected by news that the Federal Reserve, as expected, said it would keep its $85 billion-per month bond-buying program in place and didn't give solid signs of when it may begin an intended reduction.
Gene McGillian, broker and analyst at Tradition Energy in Stamford, Conn., said the continuation of the Fed program may provide a boost for crude oil prices in coming weeks once refiner demand for oil picks up after maintenance season ends.
He said the current high supplies could lead crude to drop to near $95 a barrel, but the continued Fed stimulus could provide support near $100 a barrel as demand picks up.
November-delivery petroleum products prices, ahead of expiration on Thursday, gained strength from the EIA data. Gasoline stocks fell 1.7 million barrels, compared with expectations of a drop of just 100,000 barrels a day. Distillate stocks (diesel/heating oil) fell 3.1 million barrels, while a drop of just 400,000 barrels had been expected.
Reformulated gasoline blendstock futures for November delivery rose 4.10 cents to $2.6508 a gallon. November heating oil futures were 1.45 cents higher, at $2.9786 a gallon.
