Oil dives 5 percent on surprise build in U.S. crude, gasoline stocks

Wed Jun 7, 2017 5:05pm EDT
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By David Gaffen

NEW YORK (Reuters) - Oil prices slid 5 percent on Wednesday to a one-month low, after an unexpected increase in U.S. inventories of crude and gasoline fanned fears that output cuts by major world oil producers have not done much to drain a global glut.

Crude stocks in the United States grew 3.3 million barrels to 513 million barrels, according to the U.S. Energy Information Administration (EIA). That confounded forecasters who had predicted a drop of 3.5 million barrels, especially a day after data from the American Petroleum Institute indicated an even bigger fall.

Gasoline inventories also unexpectedly rose, imports increased, and exports dropped, the EIA data showed.

“These figures spell a setback to the joint effort by OPEC and some non-OPEC countries to curb their output," said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.

"However, without persistent drawdowns in U.S. oil stockpiles, the process could be painfully slow.”

U.S. crude futures settled down 5 percent, or $2.47 a barrel, at $45.72 a barrel, the lowest settlement for U.S. crude since May 4. U.S. benchmark futures CLc1 have slid more than 11 percent in 10 days of trading.

Brent crude prices LCOc1 fell $2.06, or 4 percent to settle at $48.06 a barrel. Official settlement prices were delayed due to a technical issue, according to a Nymex spokesperson.

Gasoline futures 1RBc1 tumbled 4 percent to $1.4921 a gallon, lowest since May 10, as rising inventories fed worries about weak demand. Overall gasoline demand is down 0.7 percent for the past four weeks from a year ago, the EIA said.   Continued...

A worker at an oil field owned by Bashneft, Bashkortostan, Russia, January 28, 2015.      REUTERS/Sergei Karpukhin/File Photo