The price of crude oil fell more than $1.50 a barrel Wednesday to a seven-week low after an Energy Department report showed that U.S. inventories climbed for a ninth consecutive week.
Crude oil for May delivery fell $1.64, to $50.22 a barrel, on the New York Mercantile Exchange, the lowest close since Feb. 18. Futures have declined $8.06, or about 14 percent, from a record high of $58.28 on April 4, though prices are 35 percent higher than a year ago.
U.S. supplies rose 3.6 million barrels last week, to 320.7 million, the highest level since the week ended June 28, 2002. Stockpiles have climbed by 26.4 million barrels, or 9 percent, in the last nine weeks.
Gasoline stockpiles rose by 848,000 barrels, to 213 million barrels, the first increase in six weeks. Inventories of cleaner-burning reformulated gasoline surged 2.1 million barrels, or 9.2 percent, to 25.1 million barrels.
Gasoline for May delivery fell 4.95 cents, to $1.4843 a gallon. Prices are down 15 percent from a record $1.7491 set on April 4, but are 28 percent higher than a year ago.
“The report gives us confidence that we’ll be able to meet demand for gasoline this summer,” said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Mass. “Fear of gasoline shortages helped move us this high.
“There is nothing in the report for the bulls to hold on to. With OPEC producing as much as they are, we can expect imports to rise in coming weeks.”
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world’s oil, boosted production quotas last month in an effort to lower prices that threatened global economic growth.
This “could be the death knell of the frenzy that sent us to records a few weeks ago,” said Jason Schenker, an analyst with Wachovia Corp. in Charlotte, N.C. “This is a further sign that we are well-supplied.”
Crude oil futures are in a situation known as “contango,” in which prices in succeeding delivery months are progressively higher than in the nearest delivery months. The lower price for May crude oil may encourage refiners to increase inventories for use in later months.
“This encourages people to store crude,” said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. in New York. “The spread between the May and June contracts is very high” at $1.91 a barrel.
On Tuesday, the International Energy Agency lowered its forecast for world oil demand for the first time in four months and said demand for oil in China is slowing.
“All of the fundamentals are getting better,” said Michael Lynch, president of Strategic Energy and Economic Research, a Winchester, Mass.-based consultant. “Expectations of strong demand in the U.S. and Asia were a major pillar of the rally. Forecasts are now being reduced.”
The average nationwide price for a gallon of unleaded gasoline fell 0.2 cent Tuesday, to $2.264 a gallon, according to AAA. Prices touched a record $2.276 a gallon Monday.
“Retail prices peaked before the driving season last year, and it looks as if the peak will be even earlier this year,” Lynch said.
