Oil tumbled to its lowest in four weeks as an unexpected increase in U.S. crude and gasoline stockpiles stoked fears that the global supply glut will remain unabated.
Futures fell as much as 4.7 percent in New York after the Energy Information Administration said American crude supplies rose by 3.3 million barrels last week, following eight straight weeks of declines. Gasoline inventories rose by about the same amount. While U.S. oil imports from Saudi Arabia plunged 55 percent, shipments from Iraq surged to the highest since 2012.
"This is really unexpected," Gene McGillian, market research manager at Tradition Energy in Stamford, Connecticut, said by telephone. "It really looks as if fears of oversupply is what’s driving the market."
Oil has traded below $50 a barrel for the past couple of weeks amid speculation that rising U.S. output will counter supply curbs by the Organization of Petroleum Exporting Countries and its partners, including Russia. American crude production will average more than 10 million barrels a day in 2018, breaking a record almost five decades old, according to the EIA’s monthly Short-Term Energy Outlook report Tuesday.
West Texas Intermediate for July delivery slid $1.99 to $46.20 a barrel on the New York Mercantile Exchange at 11:11 a.m. in New York. The trading volume was more than double the 100-day average. Prices rose 79 cents to close at $48.19 Tuesday after declining 2 percent the previous two sessions.
Brent for August settlement was $1.69 lower at $48.43 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 65 cents, or 1.3 percent, to $50.12 on Tuesday.
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As concerns about supply persist, U.S. drillers have added rigs for 20 straight weeks, the longest streak in at least three decades, undercutting efforts by the OPEC to cut production and eliminate a global glut. Rigs in the U.S. have more than doubled in the past year, according to Baker Hughes Inc.
- Shell lifted force majeure on Nigerian Forcados oil exports, according to a company spokesperson.
- The biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities amid a diplomatic crisis gripping the world’s main energy-exporting region.
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