LONDON – Oil pulled back from record highs on Wednesday after U.S. data showed crude inventories piling up in the world's biggest consumer, defying expectations.
Earlier the market had hit new highs as traders bet on another decline in U.S. crude stocks. Fears that hurricanes would disrupt output in the Gulf of Mexico and a spate of unexpected shutdowns at U.S. refiners also fuelled the rally.
U.S. light sweet crude for September delivery was trading at $61.65 on the New York Mercantile Exchange (search), down 24 cents after touching $62.47.
London Brent crude was down seven cents at $60.55 after peaking at $61.25 a barrel.
Oil prices have charged higher over the past two years as the world's overstretched production capacity has struggled to satisfy voracious demand from the United States and the rapidly growing economies of countries such as China and India.
"The economy is moving along pretty well, it's a fairly consistent theme that high prices are not damaging global growth," said Kevin Norrish, analyst at Barclays Capital.
"There has been all sorts of news this week that would serve to emphasise the risk on the supply side."
Department of Energy (search) data on Wednesday showed a 200,000 barrel rise in crude inventories. Analysts had expected a decline of 1.6 million barrels.
Gasoline stocks fell four million barrels -- much steeper than the predicted 900,000 barrels.
U.S. gasoline demand is some 2.4 percent higher than a year ago. Car manufacturer General Motors Corp. (GM) said sales of gas-guzzling SUVs were at an all-time high in July.
A spate of refinery problems showed the strain on the supply system of running near full tilt for prolonged periods to meet growing demand.
"Each problem is just a reminder as to how close to the edge we are running," said Deborah White, senior economist at SG Commodities. "The refiners have been running a marathon for two years, they are exhausted. And the marathon is far from over. The last stretch is uphill to produce winter fuel supplies."
Motiva Enterprises was the latest to experience problems, when it shut a crude unit at its 240,000 barrels ber day Norco refinery in Louisiana for unplanned maintenance.
Exxon Mobil Corp. (XOM) shut down its 235,000-bpd refinery in Joliet, Ill., on Saturday night, while BP Plc. shut a gasoline-producing unit over the weekend at its giant Texas City refinery.
As many as 21 named storms and 11 hurricanes are forecast for the 2005 hurricane season, matching a record set in 1933, U.S. government forecasters said on Tuesday.
Hurricanes and smaller storms have already disrupted Gulf of Mexico (search) production this year, although none have been as destructive as last September's Hurricane Ivan.