By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices plunged 4 percent to the lowest in nearly seven weeks on Wednesday as U.S. crude inventories surged to a new record high, feeding concerns a global could persist even with OPEC output curbs.
Crude stockpiles in the world's top energy consumer have been rising since the start of the year, and last week soared 8.2 million barrels, more than quadruple forecasts, as refineries cut output and imports rose, data from the U.S. Energy Information Administration showed. [EIA/S]
U.S. West Texas Intermediate crude fell to its lowest since Jan. 18, tumbling $2.17 or 4.1 percent, to $50.97 per barrel at 1:40 p.m. EST (18408 GMT).
Brent crude slumped to its lowest since Jan. 18 at $53.82, down $2.10 or 3.8 percent.
Technical selling also drove prices lower, traders said.
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"This is one of those occasions where the news follows the trend and we've now tried for the better part of the year to get through the $55-$56 area for WTI specifically and we've failed," said Brian LaRose, technical analyst at ICAP in Jersey City, New Jersey.
"This is more of a catalyst and a wake-up call to a lot of people to say here's some fundamentals to back up what technicals have been saying for the last three weeks."
Key support levels for WTI to watch are the $51-$50 range heading to the end of the week, which is being tested in Wednesday's session, LaRose said, adding that if breached, the next levels to watch would be the $48-$47 range.
Speculators including hedge funds and money managers have accumulated a record level on net longs in crude oil, leaving the market vulnerable to a correction. [CFTC/]
Also pressuring oil prices were expectations of a U.S. interest rate hike next week, which lifted the dollar against a basket of currencies, making greenback-denominated oil more expensive for holders of other currencies.
Oil prices have been supported by a supply cut that started on Jan. 1 by the Organization of the Petroleum Exporting Countries plus Russia and other non-members. Data has suggested high compliance with the deal.
Kuwait Oil Minister Essam Al-Marzouq said OPEC's compliance with an oil output cut stood at 140 percent in February, while non-OPEC members compliance was 50-60 percent.
Total output reductions have exceeded 1.5 million barrels per day (bpd) out of almost 1.8 million bpd pledged, Saudi Energy Minister Khalid al-Falih said on Tuesday. He said the results exceeded low market expectations.
U.S. gasoline futures , meanwhile rose as much as 1.6 percent after EIA data showed the biggest weekly drawdown in stockpiles since 2011. However, prices turned negative as crude plunged.
"Demand remains tepid, even if weekly statistics overestimate the declines," Energy Aspects said in a note.
"We were expecting (gasoline) stockdraws in the Atlantic Basin during turnarounds, but supplies will rise again as refineries return from works, which should temper the fervour that has returned to the market after last week's stark sell-off."
(Additional reporting by Alex Lawler in London, Ethan Lou in Calgary and Keith Wallis; Editing by David Gregorio and Marguerita Choy)