Front-Month Crude Settles Below $70

The Energy Information Administration said crude stockpiles rose by 200,000 barrels for the week ending May 14. Analysts surveyed by Platts, however, expected to see a 950,000 barrel supply build.
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NEW YORK (

TheStreet

) -- Oil inventories rose at a lighter than expected rate last week, according to a government assessment released Wednesday, though the news did little for oil futures as the front-month contract settled below the $70-a-barrel mark.

The Energy Information Administration said crude stockpiles rose by 200,000 barrels for the week ending May 14. Analysts surveyed by Platts, however, expected to see a 950,000 barrel supply build.

The report went on to show gasoline stocks saw a 300,000 barrel drawdown, though estimates called for a slightly steeper drop of 450,000 barrels, while distillate fuel supplies decreased by 1 million barrels. Analysts had expected those stockpiles to jump by 940,000 barrels.

Stockpiles at the much-watched Cushing, Okla. delivery point also added about 900,000 barrels last week.

Crude futures brightened a bit immediately after the report, but spent much of Wednesday's trading session in negative territory. The front-month June delivery contract managed to add 46 cents, or 0.7%, but settled below the $70-mark, at $69.87 a barrel. The more actively traded July crude contract lost 22 cents, or 0.3%, to settle at $72.48 a barrel.

Crude futures' rocky trade was largely dictated by news out of the eurozone. The

euro slumped earlier in the session,

weakening crude as Germany's ban on naked short-selling created more uncertainty. A

firming euro

gave some support to crude futures but investors couldn't shake fears that eurozone weakness would negatively impact the global recovery and cut oil demand.

July heating oil on the Nymex shed 2 cents, or 0.9%, to settle at $1.96 a gallon, and July gasoline futures lost 3 cents, or 1.4%, to settle at $2.01 a gallon.

The German ban also

pressured stocks

throughout Wednesday's session.

With stocks down across the board, oil-related equities followed suit. The NYSE Arca Oil index slid 0.4% and the Philadelphia Oil Service Sector index lost 1.2%. On the Dow,

Exxon Mobil

(XOM) - Get Report

shed 34 cents, or 0.5%, to $62.45 and

Chevron

(CVX) - Get Report

, lost 25 cents, or 0.3%, at $76.60.

Elsewhere, early reports speculated that tar balls that landed on the coast of Key West, Florida may have come from the

BP

(BP) - Get Report

deepwater oil leak disaster in the Gulf of Mexico. But a

Reuters

report today said coast guard testing showed the tar balls did not come from the site.

During his congressional testimony Tuesday, Interior Secretary Ken Salazar said his department was examining safety issues at another BP rig called Atlantis, according to

Reuters

, and some legislators are now requesting the rig be shutdown until safety can be proven. BP's stock finished the session down by 0.2%.

Also on the Nymex, the June natural gas contract slumped 4.2% lower, losing 18 cents to settle at $4.16 per million British thermal units. The EIA will release storage data for the week ending May 14 on Thursday morning. A Platts poll shows analysts are anticipating an injection 76 to 80 billion cubic feet.

--Written by Sung Moss and Melinda Peer in New York

.