Crude Drops Off Record High

Updated from 11:41 a.m. EDT

After soaring into record territory early Wednesday, oil futures dropped sharply later in the session, led by news that gasoline and distillate inventories grew more than analysts were expecting during the previous week.

September West Texas intermediate crude was down $1.75 at $76.45 a barrel at the New York Mercantile Exchange. Reformulated gasoline was 8 cents lower at $2.03 a gallon, and heating oil was lower by 5 cents at $2.07 a gallon.

Meanwhile, natural gas futures spiked 15 cents to $6.34 per million British thermal units.

The EIA's weekly inventory data was surprising on all fronts. Crude stores fell by 6.5 million barrels during the week ended July 27, whereas analysts were expecting a 1.1 million-barrel draw. Gasoline stores grew by 586,000 barrels, but analysts had forecast a 125,000-barrel injection. Distillate stocks climbed 2.9 million barrels, well above the anticipated 1.3 million-barrel increase.

Refinery utilization rates grew from 91.7% to 93.6%, the largest one-week increase so far this year.

Traders at the Nymex first reacted to the large draw-down in oil stores by bidding near-term crude up as much as 46 cents to $78.66, a record high for the commodity.

Although the large crude withdrawal was unexpected, the fact that there is high demand isn't exactly new, according to John Person, president of National Futures.