Oil prices dropped on Wednesday after US government data showed crude and gasoline piling up in storage tanks and consumers cutting down on fuel use. Adding pressure to prices, Hurricane Wilma was on a track away from vulnerable rigs and refineries in the Gulf of Mexico, sparing them from what would have been their third beating since late August.
US crude settled down 79 cents to $62.41 a barrel, after losses of $1.16 on Tuesday. London Brent crude fell 68 cents at $58.60.
Prices slumped after weekly US government data showed crude stocks rising by 5.6 million barrels, sharply up on a forecast build of 2 million barrels.
The build brings US crude supplies nearly 12 percent above last year after hurricanes Rita and Katrina toppled refineries on the Gulf Coast and slashed demand for the feedstock.
Gasoline supplies, meanwhile, rose by nearly 3 million barrels against expectations of a 1.2 million barrel draw, though distillates, which include heating oil, declined by 1.9 million barrels - nearly matching expectations.
Adding to the bearish impact of the stocks data, the US government's Energy Information Administration also provided the latest evidence that high prices have eroded demand. It said demand for oil products in the world's biggest energy consumer fell 3.2 percent from a year ago.
Analysts said Wednesday's data were very bearish. But they said the full impact on inventory levels from hurricanes Katrina and Rita that struck oil infrastructure in August and September had yet to be seen.
"We're still dealing with trying to guess what the hurricanes' impact was on oil facilities," said Bill O'Grady of A.G. Edwards in St. Louis. "Normally we base our forecasts on seasonal patterns, now seasonal patterns are disrupted."
US refineries are gradually resuming normal operations after the storms. Five plants were still shut along with two thirds of Gulf of Mexico oil output.
Oil companies operating in the Gulf kept their fingers crossed Wednesday that massive Hurricane Wilma would stay away from their rigs and platforms, many of which remained severely battered by the two previous storms.
"We're monitoring the storm extremely closely and, while it is still early, it looks like this one will spare us," said Dory Stiles, a spokesman for Murphy Oil.
Wilma, which intensified rapidly into the strongest hurricane on record Wednesday, was churning toward Mexico's Yucatan Peninsula and was expected to take a sharp turn toward Florida's Gulf Coast, arriving there by the weekend.
That path would take it well away from energy operations clustered along the coasts of Texas and Louisiana.
As of Wednesday afternoon, BP had announced it was evacuating nonessential employees from some of its offshore facilities in the Gulf, while many other operators said it was "business as usual" - for now.
"If something changes we're ready to evacuate," said Mickey Driver, spokesman for Chevron Corp. Producer group Opec, attempting to manage recent soaring prices, has been pumping at near full tilt.
The cartel expects to boost its production capacity to 38 million bpd by 2010 from 32.5 million bpd this year, its acting Secretary General Adnan Shihab Eldin said.
Tensions with Opec's second biggest producer Iran mounted. Diplomatic and industry sources said Iran was blocking British and South Korean goods in an apparent attempt to force the two to drop their opposition to Tehran's nuclear programme. Oil and gas exports have not been affected.