Oil futures settled below $40 a barrel on Wednesday after U.S. government data revealed a sixth straight weekly climb in crude supplies that was about three times higher than the market expected.

But gasoline supplies dropped and demand remained strong, hinting at the potential for a rise in appetite for crude to increase gas inventories.

May West Texas Intermediate crude CLK26, settled at $39.79 a barrel, down $1.66, or 4%, on the New York Mercantile Exchange. It was trading at $40.55 before the supply data. Prices saw a modest decline Tuesday in the wake of the terrorist attacks in Belgium.

May Brent crude UK:LCOK6 on London’s ICE Futures exchange fell $1.32, or 3.2%, to $40.47 a barrel, pulling back Tuesday’s settlement, which was the highest since Dec. 4.

The U.S. Energy Information Administration on Wednesday reported a 9.4 million barrel jump in crude-oil supplies to 532.5 million for the week ended March 18. That was bigger than the 8.8 million-barrel increase reported by industry group the American Petroleum Institute, and more than triple the rise of 2.7 million barrels expected by analysts polled by Platts.

Crude supplies have now posted increases in each of the last six weeks, based on EIA figures.

Gasoline supplies, however, dropped by 4.6 million barrels, while distillate stockpiles edged up by 900,000 barrels last week, according to the EIA. The Platts survey showed forecasts for declines of 1.3 million for gasoline and 1.7 million for distillates, which include heating oil.

Crude-oil supplies at the Gulf Coast are seeing a big build, while gas demand is “humming,” said Phil Flynn, senior market analyst at Price Futures Group. It looks like “the Gulf Coast is a dumping ground for supply” as it has the most storage, he said.

The EIA data show that crude-oil stocks total 280 million barrels at the Gulf Coast region, up from 271 million a week earlier. Total domestic oil production edged down by 30,000 barrels to 9.038 million barrels a day in the latest week.

Over the last four weeks, total motor gasoline product supplied, which offers a measure of demand, was up 7% compared with the same time last year, averaging about 9.4 million barrels a day.

On Nymex, April gasoline US:RBJ6 ended at $1.454 a gallon, down 4.3 cents, or 2.9%, while April heating oil US:HOJ6 lost 4.8 cents, or 3.8%, to $1.204 a gallon.

April natural gas US:NGJ16, meanwhile, settled down by 6.9 cents, or 3.7%, at $1.794 per million British thermal units, as the market expects a report Thursday to show the first weekly increase this year for U.S. natural-gas stockpiles.



Meanwhile, the recent strength in the U.S. dollar DXY, +0.03% has “abruptly stopped the rally” in crude-oil prices, said John Macaluso, an analyst at Tyche Capital Advisors. A stronger greenback makes dollar-denominated commodities such as oil, more expensive for buyers using other currencies.

Macaluso said the oil rally “ran its course” and “with large amounts of net long [speculators] out there, the biggest threat to prices may be a profit-taking avalanche if further weakness occurs.”

Next month, several major oil producers are set to meet to discuss a freeze in supply at January levels. The Organization of the Petroleum Exporting Countries’s secretary-general said Monday that about 15 producing nations will attend the meeting April 17.