Oil falls on rise in crude stocks, reserves talk
NEW YORK (Reuters) - Oil prices fell on Wednesday as a big rise in U.S. crude inventories and the prospect the United States and some European nations might tap strategic reserves sent futures into retreat.
U.S. crude stocks rose by 7.1 million barrels last week, the Energy Information Administration said, more than forecast.
Gasoline inventories declined by a more-than-expected 3.54 million barrels and distillate stocks fell 700,000 barrels.
"It's a battle of the headlines that makes for a mostly bearish report," said John Kilduff, a partner at Again Capital LLC.
"The large gain in crude oil inventories is countered by the large decline in motor gasoline, but the sizable uptick in the refinery utilization argues for more product increases in coming reports," Kilduff added.
Ahead of the inventory data, the prospect of a release of strategic oil reserves from the United States and some of Europe's consuming nations pressured oil.
France is in contact with Britain and the United States on a possible release of strategic oil stocks to push fuel prices down, Le Monde daily said on Wednesday, citing presidential sources.
A release of strategic oil stocks "is a matter of weeks", the French newspaper said.
Brent crude fell $1.44 to $124.10 a barrel by 2:48 p.m. EDT (1848 GMT), having dropped to $123.53 intraday, testing below the 30-day average of $123.87.
U.S. crude dipped by $1.92 to settle at $105.41 a barrel, below the 30-day average of $106.32 and having fallen as low as $104.67.
Even with the day's losses, Brent was on pace to post a 15 percent rise for the quarter, with U.S. crude up more than 6 percent.
Brent's premium to U.S. crude increased slightly and edged above $19 a barrel intraday.
Trading volumes exceeded half a million lots for both Brent and U.S. crude, but turnover for both was below their 30-day averages.
Worries about the health of the U.S. economy also helped keep oil prices pressured.
New orders for U.S. durable factory goods rose less than expected in February and a gauge of future business investment also fell short of forecasts.
Traders and analysts said some additional pressure on commodities may have come from Goldman Sachs saying it was shifting its recommendation on commodities to "neutral" from "overweight" on a near-term horizon, as most commodity markets including copper, crude oil and soybeans have reached the brokerage's near-term targets.