Crude Oil Pummeled Again

The energy space got crushed for the second consecutive day Wednesday as bearish oil inventory figures, falling demand for oil and its derivative products, and worries about a slowing economy eliminated all remnants of optimism in energy futures and equities markets.

West Texas crude futures for August delivery dropped $4.14 to $134.60 at the New York Mercantile Exchange, and Brent crude lost $3.52 to settle at $138.75. Reformulated gasoline slid 8 cents to $3.28 a gallon, while heating oil mustered a fractional gain to close at $3.84 a gallon.

Near-term natural gas fell 8 cents to $11.40 per million British thermal units.

August WTI treaded water near the $139-a-barrel level through the overnight trading sessions in Asia and Europe, wounded by its record-breaking free fall of $10.50 incurred Tuesday morning.

However, new oil inventory data released at 10:30 a.m. Wednesday by the Energy Information Administration showing surprisingly large builds in crude and gasoline stores sent oil traders scurrying to reverse their remaining net-long positions, and August WTI collapsed $7 in less than 15 minutes.

The EIA figures showed that commercial crude inventories grew by 2.95 million barrels during the week ending July 11. Analysts were expecting a draw of 2.2 million barrels, according to a Bloomberg analyst survey. Motor gasoline stocks jumped 2.47 million barrels vs. analyst forecasts for an 800,000 barrel draw, and distillate inventories increased by 3.2 million barrels -- 1.2 million barrels more than analysts were expecting.

Total petroleum stocks including crude oil and all petroleum products grew by 7.5 million barrels - the largest weekly increase since June 2007.