Crude Oil Declines as Inventories Report Shows Big Gains

Crude oil declined more than $1 on Wednesday after weekly inventories surpassed forecasted gains, increasing worries of a slump in demand.

The U.S. Energy Department released its report from last week's inventories today. Crude oil inventories rose 7 million barrels to 300 million barrels in the week ended February 1. Likewise gasoline supplies rose 3.6 million barrels last week. Distillates inventories (heating oil and diesel fuel) rose 100,000 barrels while analysts expected a loss of 1.8 million barrels, AP reported.

Comparing the results with a survey from Dow Jones Newswires, crude oil inventories rose nearly three times what analysts expected. Gasoline supplies rose twice as much as estimates.

Crude oil fell $1.28 or 1.45 percent to $87.13 a barrel on the New York Mercantile Exchange, at 3:51 p.m. Brent crude fell $1.28 or 1.44 percent t $87.82 a barrel on ICE Futures Exchange in London.

The Energy Department said today's inventories reached the highest gain in almost four years. It said gasoline inventories jumped to their highest since February 1999.

In addition, the report stated that refineries worked at 84.3 percent of their capacity. Imports of crude oil climbed 4.6 percent to 10.5 million barrels a day touching, the highest level since August 2007. Imports of petroleum products surged 26 percent to 4.22 million barrels a day.

Meanwhile, a spokesman from Royal Dutch Shell PLC said today that the company declared a legal force majeure at one of its crude oil exports facilities in Nigeria due to security concerns over rebel attacks. Such a circumstance allows the company to excuse itself from fulfilling contractual obligations. The pipeline in question at shell delivered about 130,000 barrels per day.

In Mexico, 13 crude oil wells in the state of Tabasco were shut down after protestors blocked them. The activists want to are opposed to foreign investmentss in state-owned Pemex, according to the mexican paper La Reforma. Pemex said the incident caused losses in crude production but did not specify the amount.