Crude Prices dipped, briefly trading below $50, pressured by government data showing an unexpected growth in supplies, a robust dollar and weaknesses in global equities.
Light sweet crude for September delivery was down 50 cents or 1% at $50.36 a barrel on the New York Mercantile Exchange.
Brent for September delivery, the global benchmark, slipped 30 cents or 0.5% at $56.76 a barrel on the London based ICE Futures Exchange.
The Energy Information Administration reported in its weekly report that crude supplies in the US grew by 2.5 million barrels for the week ending 18 July. Analysts polled by Reuters had predicted a 2.3million barrel draw for the same period.
According to analysts, the crude build was caused by an increase in imports from Saudi Arabia with the EIE reporting that Imports from the world’s biggest oil produces grew to 1.44 million barrels a day from 1.35 million barrels a day.
“The crude oil inventory rise was driven by a strong rebound in crude oil imports, which neared 8 million barrels per day,” John Kilduff, partner at Again Capital LLC in New York, told Reuters
Crude inventories typically decrease around this period with most refineries running at higher than usual rates to process crude into gasoline with demand growing during the traditional US driving season.
According to the EIA refining capacity utilization increased by 95.5% this week, the highest it has been since 2005.
The most surprising thing is the build in crude-oil inventory,” Andy Lipow, president of Lipow Oil Associates in Houston, told the Wall Street Journal.
“This has got to be concerning for the market, as in six weeks we’re going to start with refinery maintenance, reducing demand for crude oil.”
Also weighing crude prices was a rebound in the dollar from its biggest decline in more than a month.
A robust dollar is bearish for the demand of commodities like oil denominated in dollars as it makes the more expensive to holders of other currencies.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org