Updated from 11:02 a.m. EDT
Crude futures fell below $58 Wednesday after a larger-than-expected increase in crude supplies pushed aside expectations of an OPEC production cut.
Light, sweet crude for November delivery shed $1.28, or 2%, to close at $57.65 a barrel on Nymex. Over the past two days, the contract has lost 4% on reports warning of an economic slowdown and the prospect of lower crude demand. Wholesale prices dropped the most in nearly two years and industrial production plummeted last month, the government reported Tuesday.
Refiners are undergoing seasonal maintenance and processing less crude into gasoline and distillates. Lower refining rates translates into higher crude stockpiles, which climbed by 5.1 barrels last week, according to the U.S. Energy Department's weekly petroleum update released earlier this morning. Crude inventories were expected to rise by just 1.5 million barrels, according to a
Refiners operated at 86.3% capacity last week, down from 89.5% the previous week.
A large drop in stockpiles last week left gasoline and heating oil prices mixed, with gasoline adding 1 cent to close at $1.47 a gallon and heating oil closing up 3 cents at $1.69 a gallon.
Gasoline inventories plunged by 5.2 million barrels last week to 210.2 million barrels and now stand 6% over last year's levels. Stockpiles of distillates declined by 4.5 million barrels to 145.4 million barrels. However, with nearly 15% higher inventories than last year, the country appears well supplied ahead of the winter heating season.
The decreases were far larger than analysts in a
poll had expected. Their estimates called for a drop of 200,000 barrels for gasoline and an 800,000 barrel drop in distillates.
Forecasts for cooler temperatures across much of the country over the next week and a snowfall in the Midwest boosted natural gas futures by 35 cents to $6.80 per million British thermal units. The fuel is used to power utilities and heat homes.
The uptick in prices came despite robust inventories of natural gas in storage, which are 14% above last year, and are expected to remain high in Thursday's weekly supply report. The fuel is expected to increase by 48 billion cubic feet last week, according to analysts polled by
The large build in crude supplies should calm the energy markets, which have been focused on domestic fuel inventories and speculation that the Organization of the Petroleum Exporting Countries will cut back production to boost energy prices. OPEC is set to hold an emergency meeting Thursday in Qatar to decide whether to trim output from its official quota of 28 million barrels per day or its actual output of 27.5 million barrels.
The cartel was not supposed to meet until Dec. 14 in Nigeria, but a slide in oil futures over the past few weeks spooked members and forced them to rethink their record production levels. OPEC is expected to trim daily output by 1 million barrels, though the Kuwaiti oil minister suggested that some members are angling for a bigger cut. Many traders have already priced in an OPEC-led cut, and crude prices have fallen.
"They feel that one million may not have any impact on oil prices," Sheikh Ali al-Jarrah al-Sabah told
. "That's the thinking of some, I feel this thinking is there. We'll see it when we meet."
OPEC last trimmed output in December 2004, when it cut production by 1 million barrels. Crude prices rose, a move OPEC is hoping to reproduce. Members of the cartel, which pumps nearly 40% of the world's crude, have said they would defend or trim exports if prices fell below $60.
Energy stocks were declining alongside crude prices and were recently down 0.9% on the Amex Oil Index.
were leading declines on the index.
During the third quarter,
recorded $4.5 billion in revenue, up from $3.8 billion in the same period last year thanks to high oil prices, increased production and higher chemical sales. Analysts polled by Thomson First Call had called for Occidental to generate $4.16 billion in sales.
Net income for the Los Angeles driller fell 33% to $1.16, or $1.36 per share, but beat analysts' predictions of $1.34 a share. Occidental shares were recently unchanged at $46.38.