U.S. crude stocks rose 3.83 million barrels in the week to March 1, the Energy Information Administration said in its weekly report.
The rise came even as refinery utilization fell during winter plant maintenance season and as the country’s oil imports dropped last week.
“This is all definitely putting some pressure on (crude oil) in the short term. The refinery runs right now are down and the build in inventories is rising,” said Phil Flynn of Price Futures Group in Chicago. “The crude market hasn’t bottomed yet.”
Brent crude oil futures fell $1.00 to $110.61 per barrel by 1:17 p.m. EST (1817 GMT). U.S. light crude oil lost $1.15 to $89.67.
Another factor pushing crude lower was the firming of the U.S. dollar on
Wednesday, which gained 0.5 percent against a basket of foreign currencies. As the dollar gains, oil denominated in U.S. currency becomes more expensive for non-U.S. buyers.
Increased signs of a strengthening U.S. economy and continued stimulus from the Federal Reserve pushed European stock indices to their highest level since the 2008 financial crisis on Wednesday.
Private U.S. employers added more jobs than expected in February, according to a report from a payrolls processor.
Meanwhile, U.S. Commerce Department data released Wednesday showed that January factory orders declined two per cent, or a little less than a 2.2 percent consensus estimate by analysts in a Reuters poll. Contributing to the fall was weaker demand for transportation equipment.
Oil traders also watched developments in Venezuela, following the death of President Hugo Chavez on Tuesday after a two-year battle with cancer.
Venezuelan authorities promised to hold a new presidential election within 30 days, as stipulated by the constitution, but set no concrete date.
The country’s oil industry was operating normally and no disruption was expected, state oil company PDVSA said.
“Chavez’s death will probably generate near term, understandable but most likely misplaced, concerns that instability during the transition could threaten (oil) supply,” said Robert McNally, an energy consultant and former U.S. White House energy adviser.
“Medium term it may create hopes that better management of the oil sector could reverse Venezuela’s trend decline,” McNally added.