Brent crude and WTI: Oil tumbles after USA oil stocks unexpectedly rise

Andrew Cummings
August 14, 2016

USA crude futures slid 1.3% on Wednesday to just above $42 per barrel.

Production in some countries, including the USA, has declined in the past year as low prices forced producers to cut spending on new drilling.

Oil declined after a government report showed USA crude inventories increased on weakening demand from refineries.

US crude oil for September delivery settled down $1.06, or 2.5%, at $41.71 a barrel on the New York Mercantile Exchange.

OPEC produced just over 33.1 million barrels of oil per day in July, up 46,400 barrels compared to June, the oil cartel said in a new report released Wednesday.

US stockpiles of crude oil and refined products rose by 2.5 million barrels in the week ended August 5 to 1.39 billion barrels, the Energy Information Administration said Wednesday. In the year-ago period, the supply cover was 26.8 days.

The agency also noted that US gasoline stocks fell 2.8 million barrels in the second-biggest weekly draw since mid-April, compared with expectations for a 1.1-million-barrel drop. Despite last week's decline, the existing stock of the most widely used petroleum product is 9% higher than the year-earlier level and is comfortably above the upper half of the average range. Crude inventories rose by 1.1 million barrels, versus expectations for a decline of 800,000 barrels according to analysts surveyed by The Wall Street Journal. The decrease in distillate fuel stocks - for the third time in four weeks - could be attributed to lower production and strengthening demand. While total oil and product inventories grew by 2.5 million barrels, those in the "other" grouping - stuff like vacuum gasoil, natural gas liquids and blending components - expanded by 3.6 million barrels to a record. Refineries' crude demand dropped 255,000 bpd from the prior week. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

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