Crude oil prices dropped after the US government reported crude inventories of a record high, but the market did not sell off as much as most though since the weekly supply builds were lower than what had been estimated by an industry group.
The build that had been cited by the EIA was around a third lower than the almost 13 million barrels that had been reported for the week to January 23 by the American Petroleum Institute on Tuesday.
Light, sweet March delivery crude pared losses by around 60 cents, trading lower by 2% or 90 cents to $45.33 per barrel on the New York Mercantile Exchange, as reported by The Wall Street Journal
In a similar move, the global benchmark, Brent, traded down 0.7% or 32 cents to $49.28 per barrel on the ICE Futures Europe.
Dominick Chirichella, senior partner at the Energy Management Institute said, “This inventory is bad, but not so bad.”
The EIA report included positives for oil products, which include drops of around 3 million barrels in gasoline stocks and around 4 million barrels in heating oil inventories and diesel.
There are traders who are expecting crude future to come under more pressure in the coming days with the realization of the situation of oversupply.
Reuters quoted John Kilduff, partner in energy hedge fund Again Capital as having said, “The sub-90 percent refinery utilization is causing oil supplies to back up, and the downward pressure on prices should continue. Refined product demand continues to be the sole source of strength for the market, but it is not enough to overcome the today wave of crude oil supplies for now.”
February reformulated gasoline blend stock gained 1.8% or 2.4 cents to $1,3741 per gallon.
February diesel pared losses, down 0.8% or 1.4 cents to $1,6488 per gallon.
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