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Oil futures sank to their lowest level in eight months Wednesday after the government said oil inventories rose to their highest level since 1990, while gasoline demand in the U.S. fell sharply.
Crude also was weighed down by the Federal Reserve's decision to extend "Operation Twist" while stopping short of more aggressive measures.
The U.S. Energy Information Administration said commercial oil inventories last week rose 2.9 million barrels to 387.3 million barrels, the highest level since July 1990, reversing two weeks of falling stockpiles, amid sinking demand in the world's biggest consumer.
U.S. oil inventories have been elevated for months due to a combination of a weak economic recovery and rising production. Earlier this month U.S. oil production had risen to the highest level in 14 years.
Inventories of refined products also rose last week. Gasoline inventories last week rose 900,000 barrels. Stocks of distillates, including heating oil and diesel, increased 1.2 million barrels, while refiners cut runs by 0.1 percentage point to 91.9% of capacity. Analysts expected oil inventories last week to fall 1 million barrels, according to a survey by Dow Jones Newswires. Gasoline stocks were expected to rise 400,000
Crude futures for August delivery on the New York Mercantile Exchange rose to $79.48
Brent oil for August settlement increase $1.47 to $90.70 a barrel on the London-based ICE Futures Europe exchange.
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