While the market positions itself for a recovery, oil and fuel continue to pile up in storage. U.S. oil inventories have increased for three consecutive weeks, and are nearly 20% above last year's levels, the Department of Energy said Wednesday in its weekly inventory report.
Gasoline demand fell 2.7% last week, and was at its lowest point for the week since 2001, the department's Energy Information Administration said.
"The [oil] market shrugged off a bearish [inventory] report and traded more as a financial asset instead of an actual industrial commodity," said Stephen Schork, editor of the energy newsletter The Schork Report.
The world's storage terminals have been overwhelmed with unwanted oil and fuel for months, but this week's data pointed to an even bigger and persistent glut than many in the oil market had anticipated. Although U.S. refiners cut back a full percentage point on crude processing, distillate inventories, including heating oil and diesel, rose by more than analysts expected, while gasoline stockpiles fell by less than the average forecast in a Dow Jones survey.
Distillates inventories are at the highest level for the week since 1982 as the recession has cut demand for the fuel, which is commonly used in shipping goods around the world.