Higher inventories send crude oil prices lower

Oil prices were down on Wednesday after new inventories data showed that crude oil, gasoline, and distillates stockpiles were all higher again last week. Crude oil inventories grew by 700,000 barrels to 322.2 million barrels in the week ending January 19, while gasoline stockpiles added 4 million barrels, much more than had been anticipated, to 220.8 million barrels.

Distillate inventories as a whole were up by 700,000 barrels to 142.6 million barrels; while heating oil stockpiles declined, diesel fuel inventories were up substantially. Stockpiles of gasoline, heating oil, and diesel are all at or above average for the time of year.

Brent crude March contracts were 95 cents lower to $54.14 per barrel, while March delivery West Texas Intermediate crude fell $1.04 by midday to $54.00 on the New York Mercantile Exchange after adding $2.48 on Tuesday, its biggest one-day increase since September 2005. The large increase in prices on Tuesday was triggered by an announcement from the US Department of Energy that the government plans to increase the capacity of the Strategic Petroleum Reserves from 691 million barrels to 1.5 million barrels, nearly double the current capacity.

Prices for petroleum products were also lower. Nymex heating oil and gasoline futures were each over 2 cents lower, to $1.5497 per gallon for heating oil and $1.4230 for gasoline.

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