Oil settled near $77 per barrel on Wednesday as the combination of bullish US crude inventory data and bearish economic news left oil seesawing between positive and negative territory. Oil fell in afternoon trading following US Federal Reserve minutes showed concern about the economic outlook.
Crude dropped from earlier highs after the US government reported that crude fell stocks at more than triple the rate analysts had projected. US crude settled down 11 cents at $77.04 after rising as high as $78.15. Crude hit a low of $76.38 before the bullish crude inventory data was released. Brent crude ended up 12 cents at $76.77.
"Crude futures turned negative after the release of the minutes of the most recent Fed meeting on the lower growth outlook," said Chris Dillman, analyst, Tradition Energy, Stamford, Connecticut. "But I don't think the revisions are big enough to warrant a deeper decline here in crude futures." Members of the Federal Reserve felt last month they should be ready to consider additional steps to boost the US economy if an already softening economic outlook took a turn for the worse.
That added to other bearish news for oil including data showing a decline in US retail sales and a surprise jump in US gasoline and distillate inventories. Earlier in the session, a report by the US Energy Information Administration showed crude stocks falling by 5.06 million barrels. "We have kind of an understandable tug of war between crude oil and products off the (EIA) report- bearish numbers for the products, but bullish numbers for the crude oil, so kind of a natural tension there," said Tim Evans, energy analyst for Citi Futures Perspective.
The Dow Jones industrial average was down 0.46 percent, while the S&P 500 Index was off 0.61 percent following the Federal Reserve report. US stocks had risen earlier on strong results from Intel. Crude and US equities have become more closely correlated this month. Investors often see the strength of equities as an indication of wider economic health and future demand for oil and energy.