Oil prices dropped after the US stockpiles reached record highs. Analysts were of the idea that the market might shed some of the rebound seen in the last two weeks, which came on lower input expectations.
There was a rise of around 5 million barrels in US crude inventories last week against the 4 million barrel estimate to near 418 million barrels, the highest level since 1982.
The strong build is an indication that the market is still struggling to get a home for the two million barrels day of oil, which have prevented the prices form forming a bottom to the selloff that started in June.
Reuters reported that Brent, the benchmark, dropped $1.38 to $55.05 per barrel after hitting a session low of $53.91.
US crude posted a decline of 70 cents to $49.32 after the intraday low of $48.05.
Oil prices have been expected to test support levels, with Brent crude showing a chance of breaking below $56.21 and US crude might potentially break below $49.88.
Economic Times quoted Fereidun Fesharaki a Facts Global Energy as having said, “The supply growth in 2015 is likely to continue unabated, albeit at a somewhat lower rate. This means a weak market in 2015 and even lower prices of oil. Demand rebound will not save the oil market.”
US crude stocks climbed by 1.6 million barrels in the week to February 6, compared with expectations for an increase of 3.7 million barrels.
Earlier on Tuesday, the IEA reported that the United States will remain the top source of the world for oil supply growth to 2020, even after the recent drop in prices.
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