Crude oil reports - released 10:30 - posted 2:05

Oil futures down for 3rd straight session on rising supplies - from MarketWatch

Crude slides 2% to under $79 a barrel after EIA report

NEW YORK (MarketWatch) -- Crude-oil futures slumped for a third consecutive session on Wednesday, with losses accelerating after the Energy Information Administration reported bigger-than-expected increases in U.S. supplies of crude and distillates.

Analysts expected cold temperatures to boost energy demand and reduce inventories. But drawdowns in heating-oil supplies were largely offset by a sharp increase in crude imports, according to Platts.

Imports of crude oil "surged as cargoes held out at sea due to end-of-year tax considerations were offloaded," said Platts senior oil analyst Linda Rafield in emailed comments.

Crude oil for February delivery was recently down 80 cents, or 1%, at $79.98 a barrel at the New York Mercantile Exchange. The contract earlier slumped more than 2% to hit an intraday low of $78.30 a barrel in electronic trade.
China Won't Always Pick Up The Pieces

Beijing is increasing the amount of capital banks need to keep on hand rather than lend. This effort to slow China's economy is an early marker suggesting the nation won't be able to bale out stock market sentiment as regularly as it did in 2009.

The latest move lower came after the EIA said crude-oil supplies rose by 3.7 million barrels in the week ended Jan. 8. Analysts polled by Dow Jones expected inventories to rise by 1 million barrels, while those surveyed by Platts expected a 1.9-million-barrel increase.

U.S. distillate inventories were up 1.4 million barrels. Analysts polled by Platts expected a drawdown of 1.7 million barrels.

The results showed even bigger increases in supplies than estimated by the American Petroleum Institute, an industry research group.

"These numbers prove in an impressive fashion that there is no supply shortage of oil and oil products in the U.S. and that the cold weather is a mere pretext for the latest price rally," said analysts at Commerzbank AG in a note to clients.

Heating oil for February delivery was down 4 cents, or 1.7%, at $2.10 a gallon.

Natural gas for the same month rose 14 cents, or 2.6%, to $5.74 per million British thermal units. The EIA will report on weekly natural-gas supplies on Thursday. Analysts polled by Platts expect a drawdown of 253 billion to 258 billion cubic feet from U.S. supplies.

Oil futures fell 2% on Tuesday on the New York Mercantile Exchange, hit by forecasts of milder temperatures and moves by China to stem its economic expansion.

The People's Bank of China lifted the reserve requirements for banks by 0.5 percentage point and lifted its interbank rate for the second time in a week. These moves are seen as a sign that the Chinese authorities may be trying to cool the country's rapid economic growth.

Oil and other commodity prices have been rising partly on optimism that China's thirst for natural resources will continue unabated as its economy expands. As a result, attempts to slow down Chinese growth tend to weigh on commodity prices.

Oil prices had also declined on Monday, pulling back from 15-month highs.