Oil prices tumble 3 percent on record U.S. crude build

Wed Nov 2, 2016 3:05pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices tumbled 3 percent on Wednesday after a record weekly build in U.S. crude inventories stoked investor worries about a global supply glut, days after analysts estimated higher monthly OPEC crude output.

The U.S. Energy Information Administration (EIA) said crude inventories rose 14.4 million barrels for the week ended Oct. 28, far more than the 1.0 million barrels analysts had expected. It was the biggest weekly rise in U.S. crude stocks since records began in 1982, and exceeded the American Petroleum Institute's report on Tuesday of a 9.3 million-barrel build. [EIA/S]

"This is very, very, very bearish. Nothing else in the report matters," said James L. Williams, energy economist at WTRG Economics in London, Arkansas.

U.S. West Texas Intermediate (WTI) crude CLc1 settled down by $1.33, or 2.9 percent, at $45.34 a barrel. It broke the $45 support earlier, sinking to a five-week low of $44.96.

Brent LCOc1 fell $1.28, or 2.7 percent, to settle at $46.86, after sliding to $46.46, its lowest since Sept. 28.

Oil markets have been volatile lately on dithering by members of the Organization of the Petroleum Exporting Countries on a production cut the group announced on Sept. 27 to rein in a crude glut that forced prices down from 2014 highs above $100. Last month, Brent hit one-year highs of $53.73 and WTI 15-month peaks of $51.93.

"There are lots of longs coming out of the market, liquidating," said Tariq Zahir, who trades long-dated WTI spreads for Tyche Capital Advisors in New York.

"I wouldn't be surprised if by the end of the week or beginning of next week, we'll get to $42 or $41 a barrel, as very few believe OPEC will make cuts that matter."   Continued...

A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014.   REUTERS/Thomas Peter