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Oil price falls on disappointing US inventories
[NEW YORK] Oil prices tumbled Wednesday after the US reported a smaller than expected decline in crude stockpiles and a surprise build in product inventories, adding to worries about abundant global supplies.
US benchmark West Texas Intermediate for delivery in August fell US$2.05 to US$44.75 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for September delivery, the global benchmark, slumped to US$46.26 a barrel, down US$2.21 from Tuesday's settlement.
The DOE data "put a damper on the market overall," said Carl Larry of Frost & Sullivan.
"Supply still seems high. Overall, people are still thinking demand is not so great."
Both contracts had surged almost five per cent Tuesday after Opec said it expected the global supply glut to ease this year and in 2017 on falling production by non-Opec producers.
But the US stockpiles data hit the market hard Wednesday. Commercial crude oil inventories fell by 2.5 million barrels in the week ended July 8 but still remained at historically high levels. Analysts had expected a three million barrel decline, according to a Bloomberg News survey.
Product inventories unexpectedly increased, including gasoline and distillates such as diesel fuel.
Crude oil production, which has steadily fallen in recent months, increased by 50,000 barrels per day last week.
The drawdown in crude was not large enough to change market sentiment, said Mr Larry. "The sentiment is bearish."