MW: Oil futures fall below $78-barrel as data show rising supplies
American Petroleum Institute says crude, gasoline supplies rose last week
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- Crude futures fell below $78 a barrel on Wednesday after an industry group reported big increases in petroleum inventories, highlighting that the market remains well-supplied with oil.
Crude oil for January delivery dropped 68 cents, or 0.8%, to $77.69 a barrel in electronic trading on Globex.
Oil prices "are down in early trading today on bearish API figures," said analysts at JBC Energy GmbH in Vienna.
The American Petroleum Institute reported late Tuesday that crude-oil inventories rose by 2.89 million barrels during the week ended Nov. 27.
Gasoline stocks increased by 3.4 million barrels and distillate supplies rose by 1.06 million barrels, the API said.
The U.S. Energy Information Administration will release its more closely watched data on Wednesday morning.
Analysts polled by Platts estimate a decline of 1.3 million barrels in crude stockpiles and a rise of 900,000 barrels in gasoline inventories last week. They also project a decline of 450,000 barrels in distillate inventories.
"The API report suggests that there are still surprisingly high levels of U.S. inventories," said analysts at Sucden Financial Research. "This, along with a forecast of mild temperatures in the U.S. for December, could push crude-oil prices in a correction lower."
Oil futures rose Tuesday for a second session, gaining more than 1% as data in the U.S. and China showed manufacturing activity in the world's two biggest oil consumers is expanding.
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.
In 2009 to date, flows into this fund group stand at $14.6 billion.
