Brent crude oil prices fell on Wednesday as a report of rising U.S. crude oil and gasoline inventories reinforced concerns about the outlook for oil demand in the world's top petroleum consumer.
U.S. RBOB gasoline futures slumped 2.75 percent, registering the biggest percentage losses in the oil futures complex on an unexpectedly high rise in inventories just as demand normally picks up when the warm weather driving season gets underway.
A strong U.S. equities market lent oil prices some support. The S&P 500 rose to a historic high on Wednesday afternoon, led by technology stocks. U.S. crude oil rose, at one point gaining more than 60 cents, as traders exploited the so-called "crack spread," or the differential in pricing between crude oil and the products that come from cracking it open during the refining process.
"People in today's trade are not just selling a few contracts of gas, they're also selling the gas crack spread, selling RBOB and buying U.S. crude against it," said Timothy Evans, an energy analyst at Citi Futures Perspective in New York.
The U.S. government's inventory data arrived after OPEC on Wednesday trimmed its forecast for global demand growth, echoing similarly low demand expectations cited earlier this week by the U.S. Energy Information Administration (EIA) in its monthly outlook.
"We have more than ample supplies of oil on hand, so we don't have real support for rising prices from that factor," said Gene McGillian, an analyst with Tradition Energy in Connecticut.
The decline in the price of Brent crude oil was curbed by data showing China imported more oil in March than February, the ongoing dispute over Iran's nuclear program and tensions on the Korean peninsula.
Brent crude futures slid 70 cents to $105.53 a barrel, having retreated after reaching $106.47. Brent's May contract expires on Monday. U.S. light, sweet crude settled up 44 cents to claw back above $94.64 a barrel.
U.S. May gasoline settled down more than 7.5 cents at $2.865 a gallon, going below the 100- and 200-day moving averages, technical levels monitored by chart watching traders. U.S. May heating oil slipped just above 1 cent.
U.S. Oil Inventories
U.S. crude stocks rose 250,000 barrels last week, the EIA's weekly report on Wednesday showed, keeping bulging commercial inventories at more than 388 million barrels, the highest level since July 1990.
The inventory rise was less than the expected build of 1.4 million barrels in a Reuters survey of analysts, but still left stockpiles 26.2 million barrels above the same period in 2012.
Gasoline stocks rose 1.7 million barrels last week, the EIA said, counter to expectations stocks would be lower, and inventories on the East Coast, which includes the New York Harbor, delivery point for the U.S. futures contract, jumped 1.5 million barrels.
U.S. distillate stocks fell last week, but only by 165,000 barrels, significantly less than the drop of 1.3 million barrels anticipated.
China Oil Imports Pick Up
China imports of key commodities rebounded in March from the previous month. Crude oil imports rose only 0.2 percent in March from February, a much more modest month-on-month increase than the 7.2 percent jump in copper imports or the 14.4 percent rise for iron ore.
Less bullish were figures showing crude imports fell 2.1 percent in March versus the year ago period.