Oil Slides as Industry Reports Surprise Increase in Crude Stocks
(Bloomberg) -- Crude plunged after an industry report showed a surprise expansion in U.S. crude stockpiles coupled with an increase in supplies at a key storage complex.
Futures declined from the settlement in New York on Tuesday after the American Petroleum Institute was said to report domestic crude inventories unexpectedly rose 3.66 million barrels last week. At the same time, supplies at Cushing, Oklahoma increased by the most since March if Energy Information Administration data confirms it on Wednesday. Oil earlier also dropped as the dollar advanced for a fourth session.
“The overall build of 3.66 million really did catch the market by surprise,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. “The build in Cushing, Oklahoma is raising concerns that maybe demand is softening just a little bit.”
The U.S. benchmark crude has averaged just below $68 a barrel this month as trade tensions between the U.S. and China imperiled global energy demand. At the same time, American sanctions threaten to disrupt Iranian oil exports, potentially creating a shortfall other nations may be ill-equipped to fill.
West Texas Intermediate crude for September delivery traded at $66.71 a barrel at 4:39 p.m. after settling at $67.04 on the New York Mercantile Exchange. Total volume traded Tuesday was about 23 percent below the 100-day average.
Brent for October settlement fell 15 cents to end the session at $72.46 on the London-based ICE Futures Europe exchange, and traded at a $6.13 premium to WTI for the same month.
The API was said to report Cushing supplies rose 1.64 million barrels last week, while gasoline inventories fell 1.56 million barrels and distillate stockpiles increased 1.94 million barrels.
The industry report compares to a Bloomberg survey of analysts showing a decline in crude stocks of 2.5 million barrels last week.
“Nobody wants to go home long” when forecasts are pointing to a bearish inventory report, said Bob Yawger, director of futures division at Mizuho Securities USA LLC.
Other oil-market news:
- Gasoline futures rose 1 percent to settle at $2.0341 a gallon.
- Libya’s oil output has risen to more than 1 million barrels a day, according to a person familiar with the situation. The African nation’s largest oil field, Sharara, is producing 300,000 barrels a day again.
- Gunvor Group Ltd. is restructuring to cut costs as the energy trader contends with few opportunities in oil markets, according to people familiar with the matter.
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