With the weekly increase in crude and gasoline inventories, fears about the glut of supply in global markets have revived, pushing oil prices down more than 2 percent. Forecasts range from a decrease of 0.7 point to an increase of 1 point. While the global oversupply has eased amid supply disruptions from Nigeria to Canada, high inventories of both crude and refined fuels coupled with signs of faltering demand growth have stifled the recovery.
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“At 521.1m barrels, USA crude oil inventories are at historically high levels for this time of year”, the EIA said. The contract dropped 0.5 percent to $42.92 on Tuesday, the lowest close since April 25.
Weekly industry data from the American Petroleum Institute (API) late on Tuesday showed that USA crude stocks fell by 827,000 barrels in the week to July 22, well short of the 2.3 million barrel draw that had been expected.
Currently, crude oil futures are trading 6.9% below their 100-day moving average and 7.6% below their 20-day moving average.
Brent for September settlement rose 15 cents to close at $44.87 a barrel on the London-based ICE Futures Europe exchange.
After topping $50 a barrel early last month on the back of output disruptions, the cost of crude has tumbled about 15 percent in recent weeks as the crucial USA holiday driving season comes to an end and global demand remains weak.
“We’ll be keeping an eye on the USA crude production number”, said John Kilduff, partner at Again Capital LLC, a NY hedge fund focused on energy.
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Distillate stockpiles, which include diesel and heating oil, fell by 780,000 barrels, versus expectations for a 714,000-barrel increase, the EIA data showed.
