Oil futures fell on Wednesday as the U.S. Energy Department reported today crude supplies rose more than expected.
Inventories of crude in the U.S. jumped 3.85 million barrels to 319.9 million barrels the last week, surprising analysts who were expecting an increase ranging from 300,000 to 900,000 according to surveys of Reuters and Bloomberg respectively.
Crude futures for June delivery fell $2.03 or 1.76 percent to $113.60 a barrel on the New York Mercantile Exchange by 11:38 p.m. Prices fell from an all time record high of $119.93 a barrel on Monday when a strike in a refinery caused a major U.K pipeline system to close.
Brent crude futures for delivery in three months rose $1.94 or 1.71 percent t0 $111.21 a barrel on the London ICE Futures Exchange.
The U.S. Federal Reserve is meeting today in Washington and is expecting to decide on a cut for benchmark interest rates today at around 2:00 p.m.
The Fed is likely to reduce interest rates by a quarter-point to 2 percent in a move to strengthen the economy according to specialists. However some traders speculate the Fed will signal an end to its interest rate cutting campaign which began in September.
If an interest cut is made the dollar will gain support having effect on the future direction of crude prices.
The Energy Department report also showed a 1.5 million barrel decline in inventories of gasoline when analysts expected stocks of the fuel to fall by 700,000. The department released its weekly report by 10:30 a.m. in Washington today.