A crude oil futures selloff picked up on Wednesday after the government reported a bigger-than-expected build in crude inventories last week.
Crude oil inventory levels rose by two million barrels for the week ending April 2, the Energy Information Administration said this morning, which outpaced a Platts forecast calling for a 1.5 million-barrel buildup.
Futures were down ahead of the report and remained depressed in the aftermath of the weak demand data. The May delivery crude contract recently traded 92 cents lower at $85.92 U.S. a barrel.
In advance of the summer driving season, the EIA also said gasoline stockpiles fell by 2.5 million barrels, far better than the 1 million barrel drawdown analysts were looking for. But distillate fuel supplies increased by 1.1 million barrels. The Street had expected distillates would do the reverse and instead decline by 1.5 million barrels.
The May heating oil contract dipped over two cents at $2.24 U.S. a gallon, while May gasoline declined two cents to $2.33 U.S. a gallon.
Dollar strength may be putting a lid on commodity prices today as sovereign debt anxiety pressured the euro. The dollar index, which compares the greenback against a cadre of currencies, was advancing 0.2% in the morning.
Stocks were coming under selling pressure in the morning, weighed down by a lagging energy sector, as the Dow lacked any eagerness to bound above the psychologically-rich 11,000 barrier.
Dow components Exxon Mobil and Chevron dipped 0.6% and 0.4%, respectively.
The NYSE Arca Oil index slid 1.1%, and the Philadelphia Oil Services Sector index dropped 0.9%.
Shares of EOG Resources were climbing 5.5% higher after announcing a series of crude oil finds in South Texas, North Dakota and Colorado.
Elsewhere in the energy realm, the board for Macarthur Coal unanimously rejected a takeover bid from Peabody Energy, saying the offer doesn't fully value of the firm. The natural gas contract for May delivery was also falling six cents to $4.04 U.S. per million British thermal units as observers await weekly EIA storage figures due Thursday morning.
