Oil Falls on Bigger-Than-Expected Supply Gain

Crude oil fell after a U.S. government report showed a bigger-than-forecast increase in supplies as fuel consumption dropped to the lowest since 2001.

Inventories rose 4.28 million barrels to 294.5 million last week, the Energy Department said today. Imports and refinery operations increased after storms curtailed supplies last month. Fuel use over the past four weeks averaged 19 million barrels a day, the lowest since October 2001.

Crude oil for November delivery fell $2.11, or 2.1 percent, to settle at $98.53 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Prices are down 33 percent from the record $147.27 a barrel reached on July 11.

Crude-oil imports increased 26 percent to 8.99 million barrels a day, the biggest one-week percentage gain since November 1997. Imports averaged 7.14 million barrels a day in the week ended Sept. 19, the lowest since January 2000, because ports were shut along the Gulf of Mexico in the aftermath of hurricanes Gustav and Ike.

Refineries operated at 72.3 percent of capacity last week, up 5.6 percentage points from the previous week, the report showed. It was the biggest weekly rise in utilization since October 2002.

Prices also dropped on skepticism that a $700 billion bank- rescue plan will stave off a recession in the U.S., which consumes 24 percent of the world's crude oil.

Brent crude oil for November settlement declined $2.84, or 2.9 percent, to settle at $95.33 a barrel on London's ICE Futures Europe exchange.

TradingEconomics.com, Bloomberg.com
10/1/2008 1:25:22 PM