Global oil markets sold off again on Wednesday after a one-day pause as large build in U.S. crude stockpiles surprised investors who had expected a draw, adding to worries about a supply glut that has battered prices for six months.
U.S. crude inventories in the United States rose by 7.3 million barrels last week to their highest December level on record, the Energy Information Administration reported. Analysts had expected a drop of 2.3 million barrels. [EIA/S]
Oil prices were already lower in extremely thin holiday volume, and extended losses after the EIA data. Crude was down as much as $2 a barrel. Brent seesawed on both sides of $60 and U.S. crude hovered around $55.
“It’s a Christmas flood of oil at a time when refiners and producers usually are letting inventories get lower for end-of-year tax reasons, but with this flood of supply there’s no place to put it,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Describing the data as “very bearish” and playing into “the mantra of supply glut”, Flynn said it would be interesting to see if U.S. crude would test a $53 low before the year ended.
U.S. crude’s front-month contract was down $1.30 to $55.82 a barrel by 11:11 a.m. EST (1611 GMT), after setting a session low at $55.07.
Front-month Brent was down $1.70 at $59.59 a barrel after a session low at $59.37. (Reuters)