Supplies gained 3.67 million barrels in the seven days ended Sept. 12, the first increase in five weeks, the EIA, the Energy Department’s statistical arm, said. Analysts surveyed by Bloomberg had expected a drop of 1.5 million. Brent widened its premium to WTI as Libya halted its biggest oil field.
“The big build in crude is going to put a lot of downward pressure on WTI,” Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at John Hancock in Boston, said by phone. “Production is rising here, otherwise we would be looking at much higher prices because of the geopolitical situation.”
WTI for October delivery slipped 46 cents, or 0.5 percent, to close at $94.42 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 28 percent above the 100-day average for the time of day. Prices are down 4.1 percent this year.
Brent for November settlement fell 8 cents to $98.97 a barrel on the ICE Futures Europe exchange after earlier rising as much as 0.6 percent. Volume was 13 percent below the 100-day average. The European benchmark crude ended at a $5.77 premium to November WTI futures. The spread closed at $5.24 yesterday.
Crude supplies climbed to 362.3 million barrels last week, the EIA said. Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, fell 357,000 barrels to 20 million.
Production of crude climbed to 8.84 million barrels a day, the highest level since 1986. The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies from shale formations in the central U.S.
“We saw a large build today,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “The trend is still down here for oil. With the amount of oil we have out there, prices are going to go lower.”
Gasoline supplies declined 1.64 million barrels to 210.7 million. Demand for the fuel in the four weeks ended Sept. 12 dropped 0.2 percent to 8.98 million barrels a day, the least since July.
Stockpiles of distillate fuel, a category that includes diesel and heating oil, climbed 279,000 barrels to 127.8 million, the highest level since Sept. 27, 2013.
October gasoline futures climbed 1.04 cents to $2.5692 a gallon on the Nymex. Ultra low sulfur diesel for October delivery fell 1.12 cents to $2.7451 a gallon.
Refineries used 16.3 million barrels a day of crude last week, down 0.2 percent. The utilization rate was 93 percent.
“The crude runs are still above 16 million barrels a day,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “We are still putting in a lot of crude in the middle of September. That’s almost bullish.”
WTI pared loses after the Federal Reserve pledged to keep borrowing costs low for a “considerable time” after its asset-purchase program ends.
Brent rose earlier after Libya halted its biggest oil field. The Sharara field, producing about 250,000 barrels a day, was shut as a precaution after a rocket attack two days ago on the connected Zawiya refinery, Mansur Abdallah, director of oil movement at the plant, said by phone today.
The North African nation, still restoring output after more than a year of political unrest and protests, was producing 870,000 barrels a day as of Sept. 14, National Oil Corp. spokesman Mohamed Elharari said that day.
The fluid political situation in Libya can lead to unplanned supply disruptions, while sustaining higher production in the longer term might be difficult “given the absence of strong governance mechanisms,” Miswin Mahesh, an analyst at Barclays Plc in London, said by e-mail.
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