Growing glut of high-quality crude signals danger for oil market

Growing glut of high-quality crude signals danger for oil market”

Oil prices went down on Wednesday as official data showed that US crude stockpiles rose unexpectedly last week.

USA crude stocks rose last week as imports jumped, while gasoline stocks decreased and distillate inventories rose, the Energy Information Administration said on Wednesday.

Brent prices fell more than 6 percent and US crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016.

Light, sweet crude for September delivery fell 1.7 per cent to $67.58 a barrel on the New York Mercantile Exchange.

USA stockpiles have been in the spotlight because they rose unexpectedly last week, stoking fears that the market is becoming oversupplied.

US crude oil exports averaged 1.31 million barrels per day last week, down by 1.37 million barrels per day from the previous week.

Before the Genscape report sparked a rally, futures fell early on concerns about oversupply.

Oil traders were caught long and wrong by the surprising increase in OPEC production and more significant than expected US Crude inventory builds.

In the previous week ending July 20, EIA reported a draw of 6.1 million barrels.

USA crude ended the week down 0.4 percent, while Brent has fallen 1.5 percent in the week so far.

A mixed report and data showing total OPEC production were offsetting supply-side strains and left the price of oil searching for direction early Friday. US crude oil production for the month of May stood at 10.442 million bpd, compared to 10.472 million bpd in April.

US President Donald Trump's decision to pull out of an worldwide nuclear deal and reimpose sanctions on Iran has angered Tehran.

Saudi Arabia's oil production grew by 230,000 barrels a day in July to 10.65 million barrels a day, just shy of an all-time peak reached in 2016, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.

The EIA also reported US crude exports posted the biggest decline on record last week, while USA crude production fell for the first time since February.

USA officials told Reuters on Wednesday that they believe Iran is preparing to carry out a major exercise in the Gulf, apparently moving up the timing due to heightened tensions.

Gasoline stocks fell by 2.5 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop.

U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said on Wednesday.

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