Oil on the skids

Price dips more than $1 a barrel as inventories of crude, gasoline exceed expectations.

April 27, 2005: 11:23 AM EDT

NEW YORK (CNN/Money) - Oil prices fell Wednesday immediately following a government report showing that crude inventories rose and gasoline stocks fell less than expected last week.

U.S. light crude for June delivery fell $1.40 a barrel to $52.80 on the New York Mercantile Exchange. In London, the June Brent contract lost 83 cents to $53.31.

The active gasoline futures contract tumbled 4.01 cents to $1.5850 a gallon on the NYMEX.

The Energy Information Administration said crude oil inventories rose by 5.5 million barrels in the week ended April 22, far higher than the 650,000 rise forecast by analysts surveyed by Briefing.com.

Crude oil imports averaged nearly 10.9 million barrels per day last week, the third highest weekly average ever, the EIA said.

Crude prices had traded in a narrow range prior to the EIA report, down about 40 cents, before the release triggered a wave of selling.

"I think they overreacted on the downside," said an analyst at Alaron Trading. "Our critical support level was at $52.90 and the price went down (below that) level.

"We'll see some buying on the dips," he added.

Over the last four weeks, crude oil imports have averaged nearly 10.1 million barrels per day, 19,000 barrels per day more than over the comparable four weeks last year, the EIA said.

At 324.4 million barrels, crude oil inventories are above the upper end of the average range for this time of year, the EIA said.

Moreover, closely watched gasoline stocks fell by 300,000 barrels, less than the expected dip of 1 million barrels. The EIA said this puts gasoline supplies at the upper end of the average range for this time of year.

Despite a decrease in refinery input, gasoline production also rose significantly last week, averaging nearly 8.9 million barrels per day from 8.6 million in the previous week, the EIA said.

Distillate fuel stocks fell 1.4 million barrels, the EIA said. Briefing.com had forecast a 100,000 barrel rise in distillate inventories.