Investing.com - Crude oil futures turned lower on Wednesday, moving further away from a nine-month high hit earlier in the week after a U.S. government report showed a larger-than-expected increase in U.S. oil supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.70 a barrel during U.S. morning trade, slumping 0.79%.
It earlier rose by as much as 0.88% to trade at a session high USD107.44 a barrel.
Crude prices traded at USD106.63 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 4.2 million barrels in the week ended February 24, significantly higher than expectations for a 1.2 million barrel increase. U.S. crude supplies rose by 1.6 million barrels in the preceding week.
Total U.S. crude oil inventories stood at a five-month high of 344.9 million barrels as of last week, remaining in the upper limit of the average range for this time of year.
Total motor gasoline inventories decreased by 1.6 million barrels, confounding expectations for a 0.2 million barrel increase, after declining by 0.6 million barrels in the preceding week.
Oil traders also focused on comments from Federal Reserve Chairman Ben Bernanke.
In testimony to the House Financial Services Committee in Washington, Bernanke said he expects growth this year to continue "at a pace close to or somewhat above the pace" in the second half of 2011 and added that the bank expects to support the economic recovery with its "highly accommodative" monetary policy.
Markets showed a muted reaction to a report showing the U.S. economy grew at a faster rate than initially expected in the final three months of 2011.
The U.S. Commerce Department reported earlier that gross domestic product increased at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
Oil prices were higher during early European trade after the European Central Bank allotted EUR530 billion in three-year loans to European lenders, after receiving bids from 800 banks, significantly more than in the bank’s first long term refinancing operation of EUR489 billion in three-year loans to 523 banks late last year.
Oil prices initially spiked higher on the news, before retracing gains, as the high uptake on the operation sparked concerns that banks in the region expect liquidity pressures to continue.
Market participants continued to monitor tensions between Iran and the West and a potential disruption to oil supplies from the region.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.5% to trade at USD122.16 a barrel, with the spread between the Brent and crude contracts standing at USD16.46.
Brent futures have rallied nearly 10% since the beginning of February, the biggest monthly gain since February of last year, as geopolitical and production issues in Iran, the North Sea, South Sudan, Syria and Yemen tightened supplies.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.70 a barrel during U.S. morning trade, slumping 0.79%.
It earlier rose by as much as 0.88% to trade at a session high USD107.44 a barrel.
Crude prices traded at USD106.63 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 4.2 million barrels in the week ended February 24, significantly higher than expectations for a 1.2 million barrel increase. U.S. crude supplies rose by 1.6 million barrels in the preceding week.
Total U.S. crude oil inventories stood at a five-month high of 344.9 million barrels as of last week, remaining in the upper limit of the average range for this time of year.
Total motor gasoline inventories decreased by 1.6 million barrels, confounding expectations for a 0.2 million barrel increase, after declining by 0.6 million barrels in the preceding week.
Oil traders also focused on comments from Federal Reserve Chairman Ben Bernanke.
In testimony to the House Financial Services Committee in Washington, Bernanke said he expects growth this year to continue "at a pace close to or somewhat above the pace" in the second half of 2011 and added that the bank expects to support the economic recovery with its "highly accommodative" monetary policy.
Markets showed a muted reaction to a report showing the U.S. economy grew at a faster rate than initially expected in the final three months of 2011.
The U.S. Commerce Department reported earlier that gross domestic product increased at a seasonally adjusted annual rate of 3.0% during the fourth quarter, up from a preliminary estimate of 2.8%.
Oil prices were higher during early European trade after the European Central Bank allotted EUR530 billion in three-year loans to European lenders, after receiving bids from 800 banks, significantly more than in the bank’s first long term refinancing operation of EUR489 billion in three-year loans to 523 banks late last year.
Oil prices initially spiked higher on the news, before retracing gains, as the high uptake on the operation sparked concerns that banks in the region expect liquidity pressures to continue.
Market participants continued to monitor tensions between Iran and the West and a potential disruption to oil supplies from the region.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.5% to trade at USD122.16 a barrel, with the spread between the Brent and crude contracts standing at USD16.46.
Brent futures have rallied nearly 10% since the beginning of February, the biggest monthly gain since February of last year, as geopolitical and production issues in Iran, the North Sea, South Sudan, Syria and Yemen tightened supplies.