The 1.7 million barrel increase (to 521.1 million barrels) was against market expectations of a 2.3 million fall.
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Before the EIA report, WTI crude for September delivery traded up about 0.5% at around $43.13 a barrel, and it tumbled to around $42.40 shortly after the report’s release.
The current market woes haven’t prevented The World Bank from raising its crude oil forecast this year to $43 per barrel compared to $41 per barrel in its April assessment, which at face value seems like good news but is still a 15 percent decline from 2015.
On Tuesday, the largest independent US refiner Valero Energy Corp said it expected lower refinery utilization over the rest of the year to counter slumping margins caused by record supplies of gasoline and diesel products.
U.S. West Texas Intermediate (WTI) crude fell 90 cents, or 2 percent, to $42.02 a barrel. The contract lost $1 to $41.92 on Wednesday, the lowest close since April 19.
At the Multi Commodity Exchange, crude oil for delivery in August was trading higher by Rs 10, to Rs 2,841 per barrel, in a business turnover of 5,023 lots.
“My view is that oil prices will find a low between $39 and $42 per barrel over the coming weeks”, said Ric Spooner, chief market analyst at CMC Markets.
For the past week, crude imports averaged over 8.4 million barrels a day, up by about 303,000 barrels a day compared with the previous week.
“The report is bearish with the increase in crude oil and gasoline inventories, along with a merely modest decline in distillate”, said John Kilduff, a partner at NY energy hedge fund Again Capital Management.
It dropped dramatically yesterday after U.S. government data stoked fears that the market recovery is coming along slower than expected.
Oil prices edged away from three-month lows on Tuesday, supported by a weaker dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls.
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Oil prices are still up more than 60 percent from 12-year lows of $26-$27 in the first quarter.
