Oil slips on recovery doubts

Oil prices fell a second straight day on Wednesday on a surprise crude oil inventory build and weak economic data.

The US Energy Information Administration inventory report showed crude stocks rose 7.31 million barrels last week as imports jumped. A Reuters analyst survey had forecast crude oil stocks would be down 1.6 million barrels.

Gasoline and distillate stocks also rose, though not as much as expected, which helped gasoline futures recover and settle slightly higher as the August gasoline and heating oil contracts found support as expiration on Friday neared.

US crude for September delivery fell 51 cents, or 0.66 percent, to settle at US$76.99 a barrel, having recovered from a US$75.90 low and traded as high as US$77.74.

August RBOB gasoline rose 0.02 cent to settle at US$2.0634 a gallon, while August heating oil dipped 0.30 cent to settle at US$1.9964 a gallon.

ICE Brent slipped 7 cents to settle at US$76.06 a barrel, having traded from US$74.80 to US$76.40.

"The crude data looks decidedly bearish and we also view the gasoline supply hike, albeit slight, as negative. Crude imports above 11 million barrels per day is also extremely bearish," Jim Ritterbusch, president at Ritterbusch & Associates.

The crude oil inventory growth was the biggest jump since the week to October 3, 2008, according to EIA data. The build came despite refinery capacity use dropping 0.9 percentage point.

Crude oil imports surged by 1.18 million barrels per day to 11.12 million bpd, the highest level for imports since the week of August 25, 2006.

Inventories rose 66,000 barrels to 37.17 million barrels at the key Cushing, Oklahoma, hub, delivery point for the New York Mercantile Exchange's benchmark West Texas Intermediate crude.

Many analysts had expected total crude stocks to be lower on disruptions from Tropical Storm Bonnie as it approached the Gulf of Mexico last week.

Bonnie dissipated last weekend, having done little damage to regional energy infrastructure, although some oil production was shut in late in the week.

The oil inventory report followed reports of cooling second-quarter economic growth that had already pressured oil.

New orders for US manufactured durable goods fell unexpectedly for a second straight month in June, posting their largest decline since August.

The Federal Reserve's latest Beige Book summary of national economic conditions, based on information before July 19, pointed to a less-than-booming recovery.

These reports followed Tuesday's report that showed US consumer confidence plummeted in July amid persistent fears about employment.

Ahead of the consumer confidence report on Tuesday, crude oil prices had reached US$79.69, their highest in almost 12 weeks.

Eyeing 200-day moving average

Tuesday's US crude price slump to a $77.50 settlement left prices below the front-month contract's 200-day moving average. The S&P 500 Index also closed below its 200-day simple moving average on Tuesday.

"WTI moved back below the 200-day moving average and both WTI and the S&P still need to prove that they can sustain that line as a support rather than a resistance," Olivier Jakob, consultant at Petromatrix, said.

US stock indexes fell on Wednesday, also weighed by the weak economic data. The dollar rose against the euro but fell against the yen.

- Reuters