NEW YORK (CNN/Money) -
Oil prices tumbled nearly $3 a barrel Wednesday after a report showing a bigger jump in crude oil inventories than traders and analysts had expected.
U.S. light crude for December delivery sank $2.71 to close at $52.46 a barrel on the New York Mercantile Exchange, a drop of nearly 5 percent. In London, Brent crude sank $2.16 to $49.40 a barrel.
Commercial inventories of crude oil rose 4 million barrels to 283.4 million last week, while heating oil stocks fell by 600,000 barrels to 48.9 million, the government's Energy Information Administration (EIA) reported Wednesday.
Analysts surveyed by Reuters had forecast an average rise in crude stocks of 1.4 million barrels and a fall in distillate stocks of 900,000 barrels.
But Larry Goldstein, president of the Petroleum Industry Research Foundation, said the sell-off may be an overreaction, adding that prices will probably stay high.
"The market is looking for good news wherever it can find it," said Goldstein, referring to the 4 million-barrel bump in crude stocks.
"But given the low level of inventories, strong global demand and lack of a cushion, we believe the market still has and will continue to have an upside risk."
Purnomo Yusgiantoro, president of the Organization of Petroleum Exporting Countries (OPEC), pitched to the Bush administration Wednesday to release oil from the nation's Strategic Petroleum Reserve (SPR).
While it's unlikely the U.S. would release any more oil from the reserve, the OPEC statement contributed to Wednesday's sell-off, Goldstein said.
"If that question is in play, it is going to drive the market down," he said.
Purnomo said Wednesday he had taken the surprise step of urging the United States to use the SPR to lower oil prices.
Purnomo's request to Washington is unusual, because OPEC usually regards government stockpiles as a threat to its own market influence.
The cartel, which controls around half of world oil exports, worries that sustained higher oil prices could eat into future demand by hurting economic growth worldwide and spurring the use of alternative fuels.
Indeed, some economists have been paring back forecasts for U.S. economic growth, partly because of this year's rapid rise in oil prices.
While the Bush administration tapped 5.4 million barrels of oil from the SPR for loans to strapped refiners on the Gulf of Mexico after Hurricane Ivan, it has held steadfast to its policy of only releasing large amounts of oil from the reserve in case of a major supply disruption.
Oil prices have surged 70 percent this year, driven by strong demand and worries about stockpiles of crude oil and heating oil. Fears that refiners have not made enough heating oil to last the winter have added to the rally this month.
-- from staff and wire reports