Oil extending losses after surprise U.S. stockpile increase

NEW YORK (Bloomberg) - Oil extended losses and headed toward a two-month low after crude inventories in the world’s biggest economy swelled more than expected.

Futures fell as much as 2% on Wednesday in New York. U.S. oil stockpiles rose by 3.1 MMbbl last week, according to the U.S. Energy Information Administration. The increase exceeded the median forecast from analysts and was bigger than any rise since May.

The U.S. benchmark crude has fallen about 16% from the peak reached on the first trading day after crippling aerial attacks damaged key Saudi Arabian oil installations. Speedy repairs by the Saudis dovetailed with signals of weakening global energy demand to undermine prices.

“The restoration of Saudi oil and demand destruction fears have the market in its grips today and today’s build in U.S. crude stocks doesn’t help that,” said Gene McGillian, manager of market research at Tradition Energy.

Meanwhile, domestic gasoline inventories dropped by 228,000 bbldespite forecasts for a 600,000 bbl increase.

West Texas Intermediate for November delivery fell $0.92 to $52.75 a barrel at 10:52 a.m. on the New York Mercantile Exchange.

Brent for December settlement slipped $0.98 to $57.91 on the ICE Futures Europe Exchange. The global benchmark crude traded at a $5.33 premium to WTI for the same month.