Crude ends lower as inventories rise

NEW YORK Wed Apr 4, 2012 7:59pm EDT

1 of 4. A driver pumps petrol into his car at a petrol station in Brussels March 8, 2011.

Credit: Reuters/Yves Herman

NEW YORK (Reuters) - Crude futures fell a second straight session on Wednesday, dropping more than 2 percent after a government report showed crude oil inventories last week rose much more sharply than expected in the United States.

Concerns about downside risks to the euro zone economic outlook expressed by European Central Bank President Mario Draghi pressured the euro to its lowest level against the dollar in three weeks, adding to the pressure on oil.

A stronger dollar can pressure dollar-denominated oil by making it more expensive for consumers using other currencies.

Wednesday's push lower came after the previous day's losses on indications from the U.S. Federal Reserve that the central bank was less inclined to implement any more monetary stimulus.

Rising domestic production and imports pushed up U.S. crude oil inventories by 9.01 million barrels last week, the Energy Information Administration said in its weekly report.

The inventory rise put stocks at their highest since June 2011 and 4.7 million barrels above the year-ago period.

Distillate stocks rose slightly, by 19,000 barrels, while gasoline stocks fell 1.46 million barrels, the EIA said.

U.S. oil inventories, crude oil stocks were expected to have risen last week by 2.2 million barrels, a Reuters poll of analysts taken ahead of weekly stocks reports showed.

Gasoline stockpiles were expected to be down 1.4 million barrels and distillate stocks were estimated to be down 400,000 barrels, the survey showed.

FUNDAMENTALS

On the New York Mercantile Exchange, May crude fell $2.54, or 2.44 percent, to settle at $101.47 a barrel, a penny below the 100-day moving average, and having traded from $101.08 to $104.12.

U.S. Secretary of State Hillary Clinton said that the time for diplomacy with Iran is not infinite and that all options remain on the table.

Exxon Mobil Corp's (XOM.N) 344,500 barrel per day (bpd) Beaumont, Texas, refinery began a planned overhaul on Sunday on Crude Distillation Unit B, a coking unit, and other associated units, a company spokeswoman said.

U.S. businesses added 209,000 jobs in March, according to the ADP National Employment Report. The report by the payrolls processor was slightly above economists' expectations for a gain of 200,000 jobs.

The U.S. March nonfarm payrolls report from the U.S. Labor Department due on Friday is expected to show a gain of 203,000 jobs, including a rise in private payrolls of 218,000.

MARKETS NEWS

U.S. stocks fell for a second day as investors faced the prospect of no new monetary stimulus from the Federal Reserve and as a poorly received bond auction in Spain suggested the effects of earlier European funding operations may be waning.

Copper fell more than 3 percent, its most in nearly two months, swept up in a broader retreat of risk assets the day after minutes from the latest U.S. Federal Reserve meeting dashed hopes for another round of monetary stimulus anytime soon. <MET/L>

Gold fell to its lowest in nearly three months, sliding for a second straight session the day after minutes of the latest Federal Reserve policy meeting doused hopes for further U.S. monetary stimulus. <GOL/>

UPCOMING DATA/EVENTS

U.S. jobless claims data due at 8:30 a.m. EDT (1230 GMT) on Thursday.

U.S. Energy Information Administration natural gas storage data due at 10:30 a.m. EDT (1430 GMT) on Thursday.

SETTLE NET PCT LOW HIGH CURRENT DAY AGO

CHNG CHNG VOL VOL CLc1 101.47 -2.54 -2.4% 101.08 104.12 285,784 245,541 CLc2 102.03 -2.52 -2.4% 101.63 104.63 100,728 72,891 LCOc1 122.34 -2.52 -2.0% 122.30 124.99 234,880 197,645 RBc1 3.3336 -0.0618 -1.8% 3.3049 3.4113 72,378 72,414 RBc2 3.2628 -0.0518 -1.6% 3.2446 3.3279 67,496 51,822 HOc1 3.1609 -0.0666 -2.1% 3.1587 3.2374 50,933 53,227 HOc2 3.1689 -0.0662 -2.1% 3.1669 3.2442 24,523 25,904

TOTAL MARKET VOLUME OPEN INTEREST

CURRENT Apr 03 30D AVG Apr 03 NET CHNG

CRUDE 648,606 542,362 602,956 1,569,070 -6,405

RBOB 232,692 201,824 149,044 347,674 -129

HO 115,317 126,973 140,210 280,831 5,135

(Reporting by Robert Gibbons and Gene Ramos; Editing by David Gregorio)