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NEW YORK (CNN/Money) -
Oil prices tumbled Wednesday as traders responded to a government report that showed U.S. stockpiles had reached their highest level in six years.
U.S. light crude for June delivery plunged $1.72, or 3.5 percent, to settle at $47.25 a barrel on the New York Mercantile Exchange.
Prices are around $11, or 19 percent lower than the record high of $58.28 hit in early April.
The Energy Information Administration said Wednesday that crude oil inventories rose by 4.3 million barrels in the week ended May 13, far greater than the 800,000 barrel rise forecast by Reuters. The government agency noted that this is the highest inventory level since May 1999, when oil prices were some $30 lower.
"There's lots and lots of crude. There's no way around it," Kyle Cooper, an analyst at Citigroup Global Markets, told Reuters. "Even with a crude supply disruption, at 334 million barrels of crude, we will be fine."
Closely watched gasoline inventories also jumped, climbing by 1.1 million barrels, versus a forecast from Reuters that anticipated a 800,000 barrel rise, allaying some concerns that stockpiles wouldn't be able to match summer driving demand.
Stockpiles of the key summer fuel are "just below the upper end of the average range," the EIA said.
In addition to the increase in refinery inputs, gasoline production also rose last week, averaging nearly 9 million barrels per day, the report said.
Total gasoline imports, including both finished gasoline and gasoline blending components averaged 988,000 barrels per day, the agency said.
OPEC pumps hard, dollar strong
Output from the Organization of the Petroleum Exporting Countries (OPEC) has climbed to nearly the highest level in 25 years, helping bolster global crude inventories, although supplies of consumer fuels are less abundant.
Top world exporter Saudi Arabia vowed Tuesday to further boost production from its current level of around 9.5 million barrels per day (bpd).
"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," Saudi Oil Minister Ali al-Naimi said in Washington.
The cartel will meet June 15 to set its output plans for the second half this year.
Oil prices are also under pressure from resilience in the dollar, which is holding near a seven-month high against the euro.
Those gains make dollar-denominated oil more expensive for non-dollar economies and encourage speculators to switch funds out of energy markets into treasuries, analysts say.
Click here for CNN/Money's special report -- "Oil Crunch 2005."
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From staff and wire reports
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