You are here

Crude tumbles to six-year low after unexpected US supply gain

[NEW YORK] Oil plunged to the lowest level in more than six years in New York as a government report showed that US crude stockpiles unexpectedly increased.

West Texas Intermediate slipped as much as 3.4 per cent after the Energy Information Administration said crude supplies rose 2.62 million barrels last week. An 820,000 barrel stockpile decline was projected by analysts surveyed by Bloomberg. Crude imports surged to the highest level since April as refineries reduced operating rates.

Oil has tumbled more than 30 per cent since this year's peak close in June amid signs that producers are maintaining output even after a surplus pushed prices into a bear market.

"This was the opposite of what was expected," Bob Yawger, director of the futures division at Mizuho Securities USA Inc in New York, said by phone. "There were a number of refinery hiccups last week and as a result demand fell." WTI for September delivery, which expires Thursday, fell $1.32 cents, or 3.1 per cent, to $41.30 a barrel at 10:51 a.m. on the New York Mercantile Exchange. Prices touched $41.18, the lowest since March 2009. The more-active October contract slipped $1.25 to $41.87.

Brent for October settlement slipped 81 cents, or 1.7 per cent, to $48 a barrel on the London-based ICE Futures Europe exchange. It touched $47.73, the lowest since January. The European benchmark crude traded at a $6.13 premium to October WTI.

US crude Inventories rose to 456.2 million in the week ended Aug 14, the EIA report said.

The Organization of Petroleum Exporting Countries has pumped above its 30 million-barrel-a-day quota for more than a year, according to data compiled by Bloomberg. Angola plans to ship 1.83 million barrels a day in October, the most since November 2011, according to a preliminary loading program obtained by Bloomberg. That compares with 1.77 million barrels a day from Africa's second-largest crude producer in September.

Iraq must increase oil output to meet the needs of its growing population and provide services, Prime Minister Haidar Al-Abadi said on his website. The nation's production climbed to a record 4.18 million barrels a day in July, according to the International Energy Agency.