Lots of oil, prices tumble
Crude inventories at highest level since June 2005; gasoline stocks rise to highest in 6-1/2 years.
NEW YORK (CNNMoney.com) - Oil prices fell for the fourth straight session Wednesday, tumbling below $58 a barrel, after a government report showed crude stockpiles ballooned four times as much as traders and analysts on Wall Street had expected.
U.S. light sweet crude for March delivery fell $1.92 to settle at $57.65 a barrel on the New York Mercantile Exchange. Just before the Energy Information Administration released its inventory report, the contract was up 29 cents to $59.86.
The government report showed crude supplies swelled by 4.9 million barrels in the week ended Feb. 10 to 325.6 million barrels, the highest level since the end of June. The rise more than exceeded estimates for a build of 1.2 million barrels.
Gasoline stocks rose for the seventh straight week, jumping by 2.2 million barrels to 225.5 million barrels, their highest level since June 1999, the EIA said. Analysts were looking for a 1.6 million barrel jump in gasoline supplies.
Crude prices edged up right after the report before turning lower.
"We're building up crude stocks, we're very comfortable on supplies worldwide," said Tom Kloza, chief oil analyst at New Jersey-based Oil Price Information Service.
Oil prices have steadily declined over the past two weeks, losing about 13 percent since the start of February.
On Tuesday, the front-month crude contract fell below $60 for the first time in 2006, while gas futures sank as low as $1.3849 a gallon, their lowest in nearly a year.
But prices could snap back, Kloza said, especially as uncertainty surrounding Iran's nuclear program mounts.
"The story of the (oil) market these days is wild swings. Geopolitical events could surface at any moment that could lead to a temporary spike," he said.
And while supplies may be swelling, worldwide daily consumption keeps growing.
Kloza said a milder-than-usual winter, despite a recent snowstorm in the Northeast, has also contributed to the slump in prices.
The EIA said distillates, used to make heating oil, rose by 900,000 barrels in the latest week, versus an expected decline of 700,000 barrels.
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