Decline: Oil dives as fall in US stocks disappoints

Crude inventories fell by 2.2m barrels in the week ended on July 1

NEW YORK: Oil prices dived on Thursday after US inventories fell less than expected last week, adding to market concerns about abundant global supplies.

Key oil futures contracts, which had been trading higher since Asian markets opened, plunged after the US Department of Energy reported its latest weekly petroleum data for the world’s largest consumer of crude oil.

US benchmark West Texas Intermediate for August delivery tumbled $2.29 to $45.14 a barrel on the New York Mercantile Exchange, its lowest price in nearly two months.

In London, Brent North Sea oil for September delivery, the global benchmark, finished at $46.40 a barrel, down a hefty $2.40 from Wednesday’s settlement. US commercial crude inventories fell by 2.2 million barrels in the week ended on July 1. The market was expecting a larger decline of 2.5 million barrels, according to Bloomberg News.

At 524.4 million barrels, US crude oil inventories are at historically high levels for this time of year, the DoE noted.

The DoE also reported a much smaller-than-expected decline in gasoline inventories during the peak summer holiday driving season. Gasoline stockpiles fell by 100,000 barrels, missing the 350,000 forecast.

A bright spot in the DoE data was a modest decline in US crude oil production, continuing a recent trend that has some investors hoping it will help to ease the global oversupply.

Published in The Express Tribune, July 9^th, 2016.

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