MW: Oil declines as data show rising inventories, weak demand
By Moming Zhou & Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Crude futures fell Wednesday for the first session in three after government data showed U.S. crude inventories rose last week as demand remained weak.
Crude stockpiles rose 2.1 million barrels in the week ended Nov. 27, the Energy Information Administration reported. Gasoline inventories increased 4 million barrels and distillate inventories, which include heating oil and diesel, fell 1.2 million barrels.
Total petroleum demand fell 2.6% to 18.32 million barrels a day, with gasoline demand down 1.6%. Petroleum demand was 6.5% below last year's level.
After the data, January crude lost 81 cents, or 1%, to $77.56 a barrel on the New York Mercantile Exchange.
The American Petroleum Institute, a Washington-based industry group, reported late Tuesday that crude-oil inventories rose by 2.89 million barrels last week. Gasoline stocks increased by 3.4 million barrels, and distillate supplies rose by 1.06 million barrels.
The government and the API use different criteria for measuring petroleum stockpiles.
"Today's EIA report confirmed yesterday API report with a substantial build in inventories," said Tariq Zahir, managing member at Tyche Capital Advisors. "With the demand picture still weak and OPEC at their lowest compliance with quotas in six months, the oil market is well supplied."
"Until we see the energy complex fundamentals improve especially with demand, the energy complex could see a volatile downside correction in the upcoming days."
The EIA data also showed crude oil imports fell 6.1% to 8.4 million barrels a day. Crude inventories at Cushing, Okla., the delivery point for Nymex crude futures, rose 4.7% to 30.9 million barrels.
U.S. refineries operated at 79.7% of their operable capacity.
Analysts polled by Platts estimated a decline of 1.3 million barrels in crude stockpiles and a rise of 900,000 barrels in gasoline inventories last week. They also projected a decline of 450,000 barrels in distillate inventories.
Also in energy trading, January gasoline lost 1.8% to $2.0059 a gallon, and January heating oil slid 0.7% to $2.0631 a gallon. January natural gas was down 1.1% at $4.711 per million British thermal units.
The United States Oil Fund (USO 39.26, -0.36, -0.91%) lost 0.7%, and the United States Natural Gas Fund (UNG 8.91, -0.13, -1.44%) fell 1%.
Elsewhere in the commodity markets, gold futures climbed to a record above $1,217 an ounce on Wednesday, buoyed by strong demand from investors amid worries about the U.S. dollar's continued weakness. Read more on gold's gains.
Investment demand for commodities remains strong. Commodity-sector funds took in more than $1 billion for the second week in a row during the week ended Nov. 25, according to data from EPFR Global.
Year to date, flows into this fund group stood at $14.6 billion.
In economic news, private-sector firms in the U.S. eliminated 169,000 jobs in November, according to the ADP employment report released Wednesday.
It was the fewest jobs lost since July 2008. The private sector has shed jobs for 22 consecutive months. Read more about the jobs data.
