Oil fell after the U.S. Energy Department reported that crude inventories surged to the highest level in more than 21 years and production and imports climbed.
Futures dropped 0.9 percent after the department said supplies rose 2.84 million barrels to 375.9 million last week, the most since September 1990. Output increased 8,000 barrels a day to 6.12 million, the highest level since November 1999. Crude also decreased as U.S. employers added fewer jobs than forecast in April and factory orders declined in March.
“Prices should be lower because there’s no shortage of oil and we’re looking at rather anemic economic growth,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “We’re getting robust builds in supply.”
Crude oil for June delivery fell 94 cents to settle at $105.22 a barrel on the New York Mercantile Exchange in the biggest decline since April 18. Futures have slipped 7.3 percent in the past year.
Brent oil for June settlement dropped $1.46, or 1.2 percent, to end the session at $118.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract settled at a $12.98 premium to New York futures, the narrowest gap based on closing prices since Jan. 31.
Inventories of crude were projected to increase 2.5 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey.
Oil imports rose 56,000 barrels a day to 8.82 million, the report showed. Fuel imports dropped 50,000 barrels to 1.81 million barrels a day.
Supplies at Cushing, Oklahoma, the delivery point for the New York oil contract, rose 1.21 million barrels to a record 43 million, the report showed. Stockpiles at the hub have climbed 13 of the last 15 weeks.
“There’s no fundamental reason for oil to be up here given how much we have in storage,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in Chicago. “There’s plenty of oil on hand.”
Companies operated refineries at 86 percent of capacity last week, up 1.3 percentage points from the previous seven days, the report showed. It was the highest utilization rate since the week ended Dec. 2.
Gasoline inventories fell 2.01 million barrels to 209.7 million last week, the lowest level since Nov. 18. Supplies of distillate fuel, a category that includes heating oil and diesel, dropped 1.9 million barrels to 124 million, the lowest level since October 2008.
Employment increased by 119,000 in April following a revised 201,000 gain the prior month, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of economists surveyed by Bloomberg called for a 170,000 advance.
“The ADP numbers took the wind out of the sails of the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market needs a steady drumbeat of positive economic news to move higher.”
The Labor Department’s payrolls report for April will be released on May 4 and is forecast to show that employers added 160,000 jobs.
Orders with U.S. factories fell 1.5 percent in March after a revised 1.1 percent gain the prior month, figures from the Commerce Department showed today in Washington. The median projection of 61 economists in a Bloomberg survey called for a 1.6 percent decline.
“Slowing economic numbers indicate that there is less demand,” said Marshall Berol, co-portfolio manager of the Encompass Fund in San Francisco, which manages about $300 million of assets. “Less activity is probably the main cause of the increase in inventories.”
Unemployment in countries that share the euro rose to the highest level in almost 15 years and manufacturing contracted for a ninth consecutive month, adding to signs the economy continues to weaken.
The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union’s statistics office in Luxembourg said today. That’s the highest level since April 1997, when the rate reached a record at the time of 10.9 percent, according to data Bloomberg has compiled since 1990.
The European jobs number sent the euro and commodities lower. The common currency slipped 0.6 percent versus the dollar at 3:11 p.m. in New York. A falling euro reduces the appeal of raw materials as an investment. The Standard & Poor’s GSCI Index of 24 commodities was down 1.3 percent, the biggest decline since April 10.
Oil in New York has fallen 4.8 percent from a March 1 peak of $110.55 a barrel as tensions have eased between Iran and Western nations over the country’s nuclear program.
“Oil at over $100 a barrel doesn’t feel right,” Hodge said. “There’s been a security premium in the price due to the tensions with Iran. That premium appears to be shrinking.”
Electronic trading volume of crude oil on the Nymex was 539,462 contracts as of 3:11 p.m. in New York. Volume totaled 568,789 contracts yesterday, 8.5 percent below the three-month average. Open interest was 1.6 million, the highest level since May 16, 2011.