Oil plunges below $96 on U.S. inventory build

By Ikuko Kao

LONDON (Reuters) - Oil plummeted below $96 a barrel on Wednesday as weekly U.S. data showed a larger than expected increase in crude inventories and falls in fuel demand.

U.S. crude fell more than $4 to as low as $95.95 a barrel, reversing a rise of more than $2 to as high as $102.84 earlier in the day. It was trading $2.92 lower at $97.72 a barrel by 1530 GMT.

London Brent crude was $3.77 down at $94.40.

Crude oil inventories in the United States, the world's largest oil consumer, increased by 4.3 million barrels last week, data from the Energy Information Administration (EIA) showed. Analysts had expected a 2.4 million barrel increase.

"The numbers look bearish. Recent EIA data about U.S. demand has also been negative," Mark Kellstrom, analyst with Strategic Energy Research, said.

"This probably continues to weigh on crude prices."

The government data also showed a surprise 900,000 barrel increase in gasoline stocks, against analysts' forecasts for a 1.6 million barrel drop. Total oil product demand over the past four weeks fell 7.1 percent from a year earlier.

New York RBOB gasoline futures fell more sharply than crude. Heating oil futures were trading lower despite a drawdown in distillate inventories, including heating oil.