Oil prices fell sharply on Wednesday after USA government data showed a surprise jump in crude oil stockpiles in the United States, as refinery runs dropped and crude imports rose by more than one million barrels a day.
Helping to lead markets astray, figures published by the American Petroleum Institute the day before had revealed a 4.6m drop in crude oil inventories, alongside builds for gasoline and distillates. August Brent crude on London's ICE Futures exchange was off 27 cents, or 0.6%, to $47.80 a barrel, also turning into the red. West Texas Intermediate, the USA benchmark for the price of oil, was down in parallel to $47.71 per barrel.
Futures slid as much as 1.3 percent in NY.
Brent crude futures LCOc1 declined by 17 cents and traded at $49.95 per barrel, while US West Texas Intermediate (WTI) crude futures CLc1 also dropped by 17 cents to touch $48.02 a barrel, reported Reuters.
Oil prices slid hard on Wednesday on double-pronged concerns that the rift between Saudi Arabia and the other Gulf nations with Qatar, which began Monday, will wind up boosting output, and unexpectedly high USA inventories of crude and gasoline. Official settlement prices were delayed due to a technical issue, according to a Nymex spokesperson.
Crude stocks at the Cushing, Okla., delivery hub fell by 1.4 million bbl, the EIA said. Overall gasoline demand is down 0.7 percent for the past four weeks from a year ago, the EIA said. "With gasoline now the seasonal leader of the complex, its weakness is dragging everything down", said John Kilduff, partner at Again Capital in NY.
American crude production will average more than 10 million barrels a day in 2018, breaking a record nearly five decades old, according to the Energy Information Administration's monthly Short-Term Energy Outlook report Tuesday.
The EIA report pegged total product demand at 19.340 million barrels a day.
Phil Flynn, a senior market analyst at the Price Futures Group, said earlier this year that USA production could reach 10 million barrels per day in August.
By early next year, the cost of deep-water oil production is expected to fall to between $40 and $50 per barrel. Some were already concerned about rising production from Libya and Nigeria, which are exempt from the agreement.