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Oil Down on Inventory Build, Home Sales

The August delivery contract for crude shed $1.50, or 1.9%, to settle at $76.35 a barrel.
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NEW YORK (

TheStreet

) -- Already under pressure after a report showed a steeper-than-expected plunge in new-home sales, oil futures continued trading lower after the government said inventories experienced a surprise buildup last week.

According to a weekly Energy Information Assessment released Wednesday, crude oil stockpiles rose by 2 million barrels for the week ending June 18. The buildup came as a surprise as forecasts provided by Platts called for a drop of 1.5 million barrels. Still, the market had gotten hint of the bearish news late Tuesday when the American Petroleum Institute reported an inventory jump of 3.69 million barrels.

Gasoline stockpiles fell by 800,000 barrels last week, the EIA said, which was just better than projections for a 500,000-barrel drawdown. Distillate fuel inventories, which had been expected to rise by 1.4 million barrels, instead climbed up by only 300,000 barrels.

The August delivery contract for crude was recently down $1.73 at $76.12, though that's off the lows of the day. August heating oil on the Nymex was losing 4 cents to trade at $2.09 a gallon, while August gasoline futures were shedding 5 cents at $2.07 a gallon.

Markets were already weighed down after

new-home sales were said to have plummeted 32.7% in May,

which built on prior bad housing sector headlines. The dour stats were draining on stocks for much of the day and several reports attributed oil's struggles to the report, though the

Dow Jones Industrial Average

was recently pulling up near the flatline, dropping 2 points to 10,292.

Oil-related stocks broadly were struggling as the NYSE Arca Oil index dropped 0.5% and the Philadelphia Oil Service Sector index fell 0.9%.

On the Dow, shares of

Exxon Mobil

(XOM) - Get Report

and

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Chevron

(CVX) - Get Report

were dipping 0.8% and 1.5%, respectively.

On Tuesday, a federal district court judge ruled against a six-month moratorium on deepwater drilling put in place by the Obama administration following the

BP

(BP) - Get Report

oil spill in the Gulf. But

The Associated Press

reported the

judge holds several oil and gas investments

including shares in

Transocean

(RIG) - Get Report

, the firm that owned the deepwater rig which exploded and set off the disaster.

Also on the Nymex, the July natural gas contract was improving by 5 cents at $4.81 per million British thermal units. Analysts surveyed by Platts expect last week's natural gas storage levels to reflect a 78 to 82 billion cubic feet increase in a separate EIA report to be released Thursday.

--Written by Sung Moss in New York