Updated from 2:39 p.m. EDT
Oil prices broke below $48 a barrel Wednesday and kept falling after a government report showed another surprising jump in crude inventories.
June crude closed down $1.70 at $47.25 a barrel on Nymex, near its session low. Crude has now fallen about 19% from its all-time high, touched in early April. Gasoline futures fell 2 cents to $1.41 a gallon.
The Energy Department said crude oil stockpiles grew by 4.3 million barrels in the week ended April 13, about four times the expected gain and the 13th build in 14 weeks. Gasoline inventories rose by 1.1 million barrels, matching estimates.
"OPEC has finally got serious," said Steven Smith, a private energy analyst. "This is a continuation of a 14-week trend in which OPEC saw that the only way to get the fear premium out of prices is by building a glut in inventories."
Still, Smith says, in a global system that consumes more than 84 million barrels a day with only 1 million barrels of spare capacity, "any hiccup can add $10 to oil prices."
Crude reserves are currently at their highest level in about six years. The U.S. total crude oil and petroleum products supply, including the Strategic Petroleum Reserves, reached about 1.7 billion barrels, the highest level in over a decade.
Refinery utilization levels rose to 94%, up from 91.8%, Wednesday's report showed. Analysts were awaiting the jump as refiners end winter maintenance and upgrade periods. But as refineries reach capacity, more concerns arise about whether they are able to feed enough gasoline to a fuel-hungry nation. Last week was a big one for imported gasoline at 10.9 million barrels a day.
In the crude oil futures market Wednesday, the gap between the June 2005 spot prices and the July 2005 contract grew to a record high of $1.80, as spot prices continue trade below future months' prices. (The situation is called "contango" by traders.)
"This is a new, large contango that tells us we have plenty of supply in inventories," said Tim Evans, senior energy analyst at IFR Markets. "I marvel at those who have the audacity to recommend buying in this market."
Evans sees crude prices decline to $30 a barrel during the summer in light of the "ongoing accumulation of oil supplies."
Saudi Oil Minister Ali al-Naimi said in an energy conference in Washington Tuesday that his country plans to continue pumping oil as much as possible to address the expected fourth-quarter supply crunch. "One of the reasons inventories are built is to anticipate fourth-quarter demand. In the fourth quarter, there's no question that production will increase,"
reported Al-Naimi saying.
Oil prices have been tamped down in the last few days as OPEC made repeated pledges for more supply and reports showed the heightened global demand levels of 2004 have eased.
Shares of major oil producers were mixed.
, fell 0.39%;
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