Oil down 4 percent; U.S. stockpile data feeds glut warning
By Barani Krishnan
NEW YORK (Reuters) - Oil markets tumbled more than 4 percent on Wednesday, erasing most of the previous session's gain, as a raft of bearish U.S. inventory data heightened concerns about a global glut.
U.S. crude stockpiles fell less than expected last week, distillate inventories rose the most since January and gasoline stocks unexpectedly increased, the Energy Information Administration (EIA) said, painting an unusually weak demand picture during the traditionally busy summer driving season. [EIA/S]
The EIA's report pressured prices in a market already bearish after world energy watchdog the International Energy Agency (IEA) warned of a global oil glut, saying surging crude stocks have pushed floating storage to seven-year highs.
"A surprising build in gasoline in the peak of U.S. driving season and a very large build in heating oil will set the tone for lower prices as we go forward," said Tariq Zahir, a trader in crude oil spreads at Tyche Capital Advisors in New York.
"The products markets will continue to put weakness in the energy complex."
Brent crude settled down $2.21, or 4.6 percent, at $46.26 a barrel.
U.S. crude fell $2.05, or 4.4 percent, to close at $44.75.
On Tuesday, both Brent and WTI rose nearly 5 percent, their biggest daily gain since April, on shortcovering and technical buying a day after hitting two-month lows. Continued...