Oil falls on big U.S. crude inventory rise

By Alex Lawler

LONDON (Reuters) - Oil fell below $115 a barrel on Wednesday after a U.S. government report showed crude oil stockpiles rose much more than expected in the world's top energy consumer.

U.S. crude stocks increased by 3.8 million barrels, the Energy Information Administration said, far more than the 300,000-barrel increase expected in a Reuters poll of analysts.

"Generally it's a bearish number, particularly on the crude oil side with a larger-than-expected build," said Eric Wittenauer, analyst at Wachovia Securities in St. Louis.

U.S. crude fell 87 cents to $114.76 a barrel by 3:46 p.m., retreating further from the record high of $119.93 reached on Monday. London Brent was off 70 cents at $112.73.

The EIA report also showed a 1.5 million barrel decline in inventories of gasoline that could limit the decline for prices. Analysts expected stocks of the motor fuel would fall by 700,000 barrels.

"The gasoline number is modestly supportive for the product but right now it seems like the crude oil market is weighing on the gasoline futures," Wittenauer said.

Oil's drop followed a more than $3 slide on Tuesday when a rebound in the dollar and easing concern about supply disruptions from Nigeria to the North Sea pressured the market.

Attention later on Wednesday will focus on the latest interest-rate announcement by the Federal Reserve and the reaction of the U.S. dollar. The decision is expected at around 7:15 p.m..