NEW YORK (Reuters) - Oil prices fell on Wednesday, but a bounce by equity markets pulled crude futures well above lows and allowed traders to shrug off data showing combined U.S. crude and product stocks rose to the highest since weekly records began in 1990.
U.S. stocks turned positive, led by consumer stocks after a reassuring same-store sales forecast from discounter Target. The S&P 500 index rose about 0.2 percent, helping oil bounce from a six-week low as risk assets benefited from optimism about the retail industry. .N
U.S. front-month September crude oil futures fell 35 cents, or 0.46 percent, to settle at $75.42 a barrel, having earlier dropped to $73.83, the lowest price since July 7.
Front-month ICE Brent for October delivery fell 46 cents to settle at $76.47, having flipped into its biggest premium to the U.S. benchmark in about two months on Tuesday.
That premium then narrowed about 20 cents to 58 cents later after inventory data showed U.S. crude oil stockpiles, especially at the key Cushing, Oklahoma, had slipped.
“You had a pop in equities and that helped crude bounce off its low,” said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
Crude slumped early after data from the U.S. Energy Information Administration showed combined inventories of crude and refined products, excluding the Strategic Petroleum Reserve, reached 1.130 billion barrels last week, topping the 1.127 billion barrels struck in September, 1990. On a monthly basis, inventories peaked at 1.37 billion barrels in 1980.
The EIA data showed a 818,000 barrel drop in U.S. crude stocks, roughly in line with analysts’ forecast for a 1 million barrel drop.
But that contrasted with Tuesday’s report from the industry group the American Petroleum Institute, which said crude oil stocks rose 5.9 million barrels last week. <API/S>
“The bearish expectations got out sized on the API report, and the equity-oil correlation remains intact, as the same sentiment that raises and dashes expectations for the global economy produces the same price effects for now,” said John Kilduff, partner at Again Capital LLC in New York.
Oil prices have seesawed in a $65 to $85 trading range since May as concerns about faltering economic recovery has stifled rallies and increases in energy demand in emerging markets have been insufficient to drain bulging global stockpiles.
Crude oil stocks at Cushing in Oklahoma, the delivery point for the benchmark U.S. crude futures, fell 687,000 barrels to 37.0 million barrels in the week to August 13, the EIA said. That left stocks near the record 37.9 million barrels in mid-May.
The high inventories at Cushing helped push North Sea benchmark Brent crude prices to the premium to U.S. crude.
Also helping keep Brent at a premium to U.S. crude was news Royal Dutch Shell (RDSa.L) declared force majeure on its Nigerian Bonny Light oil stream after a rise in sabotage on its pipelines cut output by up to 100,000 barrels per day.
Reporting by Alejandro Barbajosa in Singapore and Ikuko Kurahone in London; Editing by Marguerita Choy