Futures fell as much as 1.1 percent after a report yesterday showed U.S. fuel stockpiles surged, with gasoline inventories rising six times more than analysts forecast to post their biggest gain this year. OPEC members had left output targets unchanged, citing ``comfortable'' global stockpiles and risks to consumption from losses on U.S. subprime mortgages.
``People are getting worried about the demand side of the equation,'' said Jan Stuart, oil economist at UBS AG in New York. ``Product inventories are building a little bit quick for this time of year and then of course the big economy around you has all sorts of people legitimately quite pessimistic about the outlook for global growth.''
Crude oil for January delivery dropped as much as 96 cents to $86.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $86.58 at 4:15 p.m. in Singapore.
The contract yesterday fell 83 cents, or 0.9 percent, to $87.49, the lowest close since Oct. 24. Prices had reached $90.39, a three-day high, after the announcement by the Organization of Petroleum Exporting Countries.
Twenty-three of 42 analysts in a Bloomberg News survey, or 55 percent, this week had expected OPEC members to maintain output at current levels. The rest expected an increase of between 500,000 and 750,000 barrels a day.
``We got that OPEC news and the market was only up a dollar,'' said Chris Mennis, owner of oil broker New Wave Energy LLC in Aptos, California. ``That was the first warning sign, if you were a bull.''
OPEC, which pumps more than 40 percent of the world's oil, will meet again Feb. 1, a month earlier than usual, to review output levels.
Brent crude oil for January settlement fell as much as 91 cents, or 1 percent, to $87.58 a barrel in after-hours trading on the London-based ICE Futures Europe exchange, and traded at $87.75 a barrel at 4:16 p.m. in Singapore. Yesterday, Brent fell 1.2 percent to $88.49 a barrel. It reached $96.65 a barrel on Nov. 26, the highest since trading began in 1988.
New York crude has fallen six of the past eight days, and is down 13 percent from the record $99.29 reached on Nov. 21.
Prices extended their decline even as yesterday's report from the Department of Energy showed a plunge in crude oil inventories in the U.S., the world's biggest consumer.
Crude stockpiles fell 7.91 million barrels, the biggest drop since September 2004, while imports declined by almost a million barrels a day from the week before as fog slowed shipping and refiners trimmed stockpiles for tax purposes. A 1.25 million-barrel decline was expected, based on the median estimate from a Bloomberg News survey of 14 analysts.
``It's all import-based,'' said Jonathan Benjamin, senior analyst at New Wave Energy. ``The fundamentals are relatively weak. In terms of gasoline, days of forward supply are creeping back up again and production has picked up.''
The decline in crude-oil inventories left U.S. stockpiles at 305.2 million barrels, the lowest since March 2005, and 0.7 percent higher than the five-year average for the period. Inventories on the Gulf of Mexico coast, known as PADD 3, accounted for three-quarters of the decline.
``It was related to imports and most of it was in PADD 3 where refiners like to reduce stocks in advance of Dec. 31,'' Kyle Cooper, director of research at IAF Advisors in Houston, said yesterday.
U.S. refineries usually cut oil inventories at this time of the year to reduce tax bills. Some states tax refineries on the amount of crude oil in storage at year's end.
Inventories of distillates, which include heating oil and diesel fuel, unexpectedly rose 1.43 million barrels to 132.3 million. Stockpiles were expected to drop 300,000 barrels, according to the median estimate from the survey. Gasoline inventories jumped 3.99 million barrels.