Oil prices ended lower despite a weekly drop crude inventories in the USA as investors continued to worry that the global glut would persist.
The US Energy Information Administration Reported that Crude inventories in the US had dropped by a faster than expected pace last week to spur the benchmark prices to a rally in morning trading.
The EIA reported that UD stockpiles fell by an unprecedented 2.2 million barrels last week o mark the second week straight the stockpiles had fallen after reaching a record high.
US production, according to the report, climbed by 5000 barrels to 9.37 million barrels for the same period. The report also showed that refinery activity in the US fell for the same period.
The rally was however short-lived aftermarket sentiment was tempered by a report by the International Energy Agency showed that the major players in the Oil industry were continuing to ramp up crude exports.
“Stockpiles are still 30% higher than the average for this time of year,” John Macaluso, an analyst at Tyche Capital Advisors told Market Watch.
“Furthermore, Saudi Arabia came out and stated it produced a record 10.3 [million barrels] per day in April,” he said. “Global oil supply is rising as a battle for market share continues to increase production.”
Also weighing oil prices down was lackluster economic data from china that raised concerns about the outlook for demand in the world’s biggest energy consumer.
Light sweet crude for June delivery closed 25 cents or o.4% lower at $60.40 a barrel on the New York Mercantile Exchange.
The US benchmark had gained immediately after the report as a decline in stockpiles can be indicative of demand but pared gains after Investors assessed the report.
“I think there’s confusion,” Ric Navy, senior vice president for energy futures at R.J. O’Brien Associates LLC, told The Wall Street Journal.
“I don’t think there’s a lot of logic, necessarily, entering into the current market environment.”
Brent futures, the global benchmark, ended 5 cents or 0.1% lower at $66.71 a barrel on the London based ICE Futures Exchange.
To contact the reporter of the story: Jonathan Millet at email@example.com