The U.S. Energy Information Administration said Wednesday that U.S. crude inventories, excluding the Strategic Petroleum Reserve, increased by 1.4 million barrels during the week of July 29.
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US crude inventories, however, added 1.4 million barrels last week, compared with market expectations for a decrease of 1.4 million barrels.
USA crude oil for September delivery fell 50 cents, or 1.2%, to $41.43 a barrel on the New York Mercantile Exchange, on course to end the week below where it began.
WTI crude plumbed $39.86, its lowest since April 20, trading $1.51, or 3.6 percent, lower at $40.09.
Oil rose in NY amid speculation the oversupply still weighing on global markets will diminish, even after prices fell into a bear market on Monday.
“The 3.3 million-barrel draw to gasoline stocks is likely a welcome surprise for refiners”, said Troy Vincent, analyst at New York-based oil cargo tracker ClipperData.
“We’re now back looking at a situation in which supply could pick up considerably again and prices as a result head south”.
Global fuel inventories are brimming as refineries have churned out huge volumes of diesel, gasoline and jet fuel but the supply glut has diminished profit margins and demand has been unable to keep up with supply.
A crude oil trader informed that prices firmed as traders who took a gamble on falling crude prices, were seen covering their positions. “Supply is what got us into this problem and supply is probably going to have to get us out”, Glickman said.
That collapse was triggered by a glut that was worsened by rising unconventional oil production, mainly from booming U.S. shale crude, alongside the OPEC cartel’s reluctance to cut output.
“With the market continuously focusing on oversupply, this bearish trend seems hard to change in the near term”, said Hans van Cleef, senior energy economist at ABN AMRO Bank as cited by Reuters.
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“In the last 72 hours, there have been reports of successful negotiations to re-open blockaded oil terminals in Eastern Libya and USA airstrikes against Daesh (ISIS) in Sirte”.
