Crude Falls as U.S. Supplies Climb to 82-Year High

West Texas Intermediate crude tumbled as U.S. oil inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China.

Futures fell the most in two weeks after the Energy Information Administration said stockpiles jumped to 395.3 million barrels in the week ended April 26, the most in weekly data started in 1982. According to monthly data, they were last at this level in 1931. U.S. companies added fewer workers than forecast in April and China’s manufacturing grew at a weaker pace, separate reports showed.

“WTI, in our view, is prone to some downward pressure,” said Michael Wittner, the head of oil-market research at Societe Generale SA in New York. “The U.S. is very comfortably supplied. The macroeconomic data flow continues to be weak.”

WTI for June delivery retreated $2.43, or 2.6 percent, to settle at $91.03 a barrel on the New York Mercantile Exchange, falling the most since April 15. The volume of all futures traded was 45 percent above the 100-day average for the time of day at 2:33 p.m.

Brent for June settlement slid $2.42, or 2.4 percent, to $99.95 a barrel on the London-based ICE Futures Europe exchange. Volume was 39 percent above the 100-day average. Brent’s premium to WTI widened 1 cent to $8.92.

“The crude market looks pretty grim,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The fact that we can hold above $90 with these inventories is the only positive news for the market.”

Crude Inventories

U.S. oil inventories rose by 6.7 million barrels last week, the EIA, the Energy Department’s statistical arm, reported. Analysts surveyed by Bloomberg expected a gain of 1.1 million.

“It’s a huge build,” said Jacob Correll, a Louisville, Kentucky-based analyst at Summit Energy Inc., which manages more than $20 billion in companies’ annual energy spending. “All the news seems to be bearish right now.”

Total fuel consumption dropped 1.4 percent to 18.3 million barrels a day in the four weeks ended April 26, the lowest level since January, the EIA report showed. Gasoline demand slipped 0.3 percent over the period to 8.51 million barrels a day, 1.8 percent lower than a year earlier.

‘Overwhelming Supplies’

“The concern is that supplies are going to exceed demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market is focused on the overwhelming supplies.”

Crude inventories gained as imports jumped 8 percent to 8.17 million barrels a day, the most since Jan. 4. The refinery utilization rate rose 0.9 percentage point to 84.4 percent. The rate was above 86 percent in the three weeks ended April 12.

Combining “the relatively restrained refinery runs and the big bounce in imports, you get this big build,” Wittner said.

Distillate supply, which includes diesel fuel and heating oil, increased by 474,000 barrels last week. Gasoline stockpiles slid 1.82 million barrels.

“With the huge build that we saw in crude, I do think we will see lower prices, probably below $90 this week,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “China’s manufacturing is putting some pressure on crude oil.”

Prices also fell as U.S. companies added 119,000 jobs last month, the smallest amount since September, figures from Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of economists surveyed by Bloomberg projected a 150,000 advance.

‘Economy Moderating’

Manufacturing in the U.S. expanded in April at the slowest pace in four months, the Institute for Supply Management’s factory index showed.

“With the general economy moderating even more in the U.S., inventory numbers like that will get people more nervous, said Marshall Berol, co-portfolio manager of the Encompass Fund in San Francisco, which has about $250 million in assets.

China’s Purchasing Managers’ Index was at 50.6, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. That compared with the 50.7 median forecast of analysts in a Bloomberg survey and a March reading of 50.9.

The U.S. and China are the world’s two largest oil-consuming countries, together accounting for 32 percent of global oil consumption in 2011, according to BP Plc’s Statistical Review of World Energy. The U.S. used 21 percent.

‘Worsening Outlook’

‘‘The worsening economic outlook dovetailed very nicely with the inventory build,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Concerns about the economy are reasserting themselves.”

Implied volatility for at-the-money WTI options expiring in June was 25.8 percent, compared with yesterday’s 22.8 percent, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 639,094 contracts as of 2:35 p.m. It totaled 617,511 contracts yesterday, 6.3 percent above the three-month average. Open interest was 1.77 million contracts.

Before it's here, it's on the Bloomberg Terminal.