Oil prices fell for a fourth straight day Wednesday after the government reported an unexpected increase in crude oil inventories and a decline in supplies of gasoline and distillates including heating oil.
"Just about all the expectations were wrong," said Tim Evans, an analyst at Citigroup in New York.
The surprise build in crude supplies undermined oil prices, but much of that increase took place on the West Coast, where most gas and oil infrastructure is isolated from the rest of the country, said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill.
And while the decline in gasoline inventories supported gasoline futures, demand is falling. That will pressure gasoline prices down the road, analysts said.
"This is a mixed report," Rafield said.
U.S. light, sweet crude for November delivery fell 8 cents to settle at $79.97 per barrel on the New York Mercantile Exchange, after fluctuating between gains and losses for much of the day.
November gasoline futures rose 1.31 cents to settle at $1.9959 a gallon, and heating oil rose 1.64 cents to settle at $2.1787 a gallon.
November natural gas futures fell 15 cents to settle at $7.277 per 1,000 cubic feet. Natural gas futures rose 37.7 cents on Tuesday, in part on concerns that a weather system could develop to tropical strength and threaten gas and oil infrastructure in the Gulf of Mexico. The latest forecasts suggest that system is weakening.
London Brent crude fell 19 cents to settle at $77.19 a barrel on the ICE Futures exchange.
In its weekly inventory report, the Energy Department's Energy Information Administration said crude supplies rose by 1.2 million barrels during the week ended Sept. 28.
One million barrels of that increase were on the West Coast, the EIA said.
Crude inventories at Cushing, Okla., the Nymex contract delivery point, rose by about 300,000 barrels last week, while storage levels elsewhere in the Midwest fell. Cushing inventories have driven market sentiment in recent weeks. A week ago, oil prices rallied despite an overall increase in crude inventories because supplies at Cushing fell.