Oil tumbles as report shows inventories surged most since 2008

April 4 (Bloomberg) -- Oil futures tumbled after the U.S. Energy Department said stockpiles rose the most since 2008.

Crude inventories climbed 9.01 million barrels to 362.4 million in the seven days ended March 30,to the highest level since June 17. Supplies at Cushing, Oklahoma, the delivery point for New York-traded futures, increased 729,000 barrels to 40.3 million.

Oil for May delivery fell $1.78, or 1.7 percent, to $102.23 a barrel at 10:38 a.m. on the New York Mercantile Exchange. Oil traded at $102.78 a barrel before release of the inventory report at 10:30 a.m.

Gasoline inventories dropped 1.46 million barrels to 221.9 million last week, the Energy Department said today. Stockpiles were forecast to slip 1.4 million barrels, according to the median of 11 analyst estimates in a Bloomberg News survey.

Distillate supplies, which include heating oil and diesel, edged 19,000 barrels to 135.9 million. Stockpiles were estimated to fall 500,000 barrels.

Oil also fell after the Federal Reserve signaled it may refrain from further monetary accommodation unless the economy falters or prices rise at a rate slower than its 2% target, according to the minutes of its March 13 policy meeting released yesterday.

“There were a lot of people expecting further monetary stimulus,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The Fed poured cold water on that.”

Fed Minutes

The central bank also affirmed its plan, first announced in January, to hold interest rates near zero through late 2014 as the economy’s improvement may not be sufficient to lower the outlook for coming years.

The Institute for Supply Management’s index of non- manufacturing industries, which account for almost 90% of the U.S. economy, fell to 56 in March from 57.3 a month earlier. The Tempe, Arizona-based group’s measure was projected to drop to 56.8, according to the median forecast of 69 economists surveyed by Bloomberg. Readings above 50 signal growth and the index averaged 53.3 since the recession ended in June 2009 through February.

Bloomberg News

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