Oil dropped as a government report showed U.S. crude inventories increased the most in two months.
West Texas Intermediate fell 2.2 percent in New York while Brent slipped 2.4 percent in London. Stockpiles climbed 7.27 million barrels in the week ended Dec. 19 as imports surged, the Energy Information Administration said. The report was projected to show a 2.5 million-barrel decline, according to the median estimate in a Bloomberg survey of nine analysts. Gasoline supplies advanced to a seasonal record.
“This report provides us with a very consistent picture that we’ve got supply outpacing demand and inventories are piling up,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “There’s too much crude coming in. Refineries are operating at a high rate but not high enough to make a dent in this.”
Futures surged yesterday after Commerce Department data showed that the U.S. gross domestic product rose at a 5 percent annual rate from July through September, the most since 2003. Oil is heading for the biggest annual drop since 2008 amid a global glut exacerbated by the highest U.S. output in more than three decades. Prices have dropped about 20 percent since the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain its output ceiling at 30 million barrels a day.
WTI for February delivery fell $1.28 to settle at $55.84 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 37 percent below the 100-day average at 1:53 p.m. The U.S. benchmark grade is down 43 percent this year.
Brent for February settlement dropped $1.45 to end the session at $60.24 a barrel on the London-based ICE Futures Europe exchange. Volume was 58 percent below the 100-day average. The North Sea crude is down 46 percent this year. The European benchmark closed at $4.40 premium to WTI on ICE, down from $4.57 yesterday.
Markets in London and New York shut early because of Christmas Eve and will be closed tomorrow for Christmas.
The gain left U.S. crude stockpiles at 387.2 million barrels, the highest level since June, according to data from the EIA, the Energy Department’s statistical arm. Imports surged 17 percent to 8.29 million barrels a day, the most since September 2013.
U.S. crude supplies have declined during December for nine of the past 10 years, according to EIA data. Gulf Coast refiners typically curb deliveries at the end of the year to reduce local taxes.
“We’re getting big crude builds at a time of year when we would least expect them,” Evans said. “The 40 percent drop in crude probably alleviates any tax pain.”
Crude supplies at Cushing, Oklahoma, delivery point for WTI traded in New York, increased 973,000 barrels to 28.8 million last week, the highest level since March.
U.S. crude production decreased 10,000 barrels a day to 9.13 million last week, the EIA said. That’s down from 9.14 million barrels a day through Dec. 12, the highest level in weekly data that started in January 1983.
Refineries operated at 93.5 percent of their capacity last week, unchanged from Dec. 12. Gasoline production rose 2.8 percent to a record 9.92 million barrels a day, EIA data showed.
Gasoline supplies rose 4.08 million barrels to 226.1 million, the highest level for this time of year in weekly data going back to 1990. Inventories of distillate fuel, a category that includes diesel and heating oil, climbed 2.3 million to 123.8 million, a nine-week high.
Gasoline futures declined 5.77 cents, or 3.7 percent, to close at $1.5127 a gallon in New York. It was the lowest settlement since April 30, 2009. Diesel decreased 6.71 cents, or 3.4 percent, to $1.9236, the lowest close since July 6, 2010.
Regular gasoline at U.S. pumps fell to the lowest level since May 2009. The average retail price slipped 2.3 cents to $2.353 a gallon yesterday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.
The global market is oversupplied by 2 million barrels a day, Qatar’s Energy Minister Mohammed Al Sada said Dec. 21.
OPEC pumped 30.56 million barrels a day in November, a separate Bloomberg survey of companies, producers and analysts showed. That exceeded their collective target of 30 million for a sixth straight month.
The 12-member group will have to “step in” if prices continue to fall, Iraqi Oil Minister Adel Abdul Mahdi said yesterday in an interview. The “fair price” of oil that was $100 to $105 a barrel is now closer to $70 to $80 a barrel, he.
Iraq’s cabinet yesterday approved a budget based on $60 oil. The 2015 spending plan was reduced because of the collapse in oil, which provides most government revenue.