December 7th, 2011

Crude Oil futures fell below $100 a barrel in New York after the U.S. Energy Department reported that crude and fuel inventories climbed as imports surged.

Crude oil futures dropped as much as 1.6 percent after the government said crude stockpiles rose 1.34 million barrels to 336.1 million last week and imports reached a 10-week high. Oil also decreased after a German official raised doubts that there will be an agreement on easing Europe’s debt crisis this week.

“The were many bearish aspects to today’s report, not just the inventory builds,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “Crude stocks were able to build in the face of a significant gain in refinery runs because of the gain in imports.”

Crude oil futures for January delivery fell 48 cents, or 0.5 percent, to $100.80 a barrel at 1:51 p.m. on the New York Mercantile Exchange. Futures, which were at $101.06 before the report’s release at 10:30 a.m. in Washington, slipped as low as $99.67. Prices are up 10 percent this year.

Brent oil for January settlement dropped 94 cents, or 0.8 percent, to $109.87 a barrel on the London-based ICE Futures Europe exchange.

Imports of crude oil rose 375,000 barrels to 9.44 million barrels a day in the week ended Dec. 2, the highest level since September, department data show. Fuel imports advanced 345,000 barrel a day to 2.65 million, the most since June.

Refineries operated at 87.7 percent of capacity last week, up 3.1 percentage points from the prior week and the highest level since September, the report showed. It was the biggest one-week gain since June.

Crude Oil: Today’s Situation

“The market hasn’t moved much on inventories recently but that’s not the case today,” said David McAlvany, chief executive officer of McAlvany Financial Group in Durango, Colorado.

Crude oil supplies were forecast to fall 1.25 million barrels, according to a Bloomberg News survey of analysts.

Gasoline supplies rose 5.15 million barrels to 215 million last week, the highest level since the week ended July 29, the report showed.

Inventories of distillate fuel, a category that include heating oil and diesel, climbed 2.53 million barrels to 141 million. Production of the fuels rose 205,000 barrels to 5.03 million barrels a day last week, the highest level since at least 1982 when the data starts.

’Knee-Jerk Reaction’

“There was a substantial knee-jerk reaction to the inventory data,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “We’re waiting for a decision out of Europe, and that could be the big market mover.”

Crude oil futures fell earlier as Germany rejected proposals to combine the current and permanent euro-area rescue funds and Chancellor Angela Merkel’s government said it was more pessimistic on the meeting’s outcome.

Germany will oppose any attempt to change a sequence in which the permanent European Stability Mechanism will take over from the current rescue fund at an appointed time, a German official told reporters in Berlin today on condition of anonymity because the negotiations are private.

“The market is seesawing today after the reports seeping out of Germany that an agreement is unlikely,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The Saudis appear to be pumping more than 10 million barrels of oil, which is a huge amount.”

Saudi Arabia, which holds the world’s biggest crude reserves, extracted more than 10 million barrels of oil a day in November and may do so again in December, Ali al-Naimi, the nation’s oil minister, said yesterday in Durban, South Africa. That’s the highest level in more than three decades.

- Mark Shenk in New York at Bloomberg.