Oil prices slid, paring earlier gains, as traders weighed the impact of the weekly growth in US stockpiles against worries about lower than expected refinery activity.
The Energy Information Administration on Wednesday released its weekly growth data showing that the country’s inventories grew by 5.3 million barrels last week exceeding the 2.9 million barrel consensus estimate growth by analysts polled by Reuters.
The growth was however smaller than that reported by the American Petroleum Institute.
The weekly growth now increases the commodity’s stockpiles in the US to a record 489.5 million barrels.
The market sentiment was however slightly lifted by news that the country’s production declined by 18000 barrels per day during the week- a 0.19% decline.
“It’s another decline in production and the market is certainly anxiously awaiting more of those, at least people who are on the long side,” Dominick Chirichella, senior partner at New York’s Energy Management Institute, told Reuters.
Light sweet crude for June delivery slipped 23 cents or 0.4% to $56.38 a barrel on the New York Mercantile Exchange. The US benchmark contract was trading at $56.10 before the supply data and topped $57 immediately after the data.
Brent for June delivery, the global benchmark, however advanced 59 cents or 1.1% after the supply data to $67.77 a barrel on the London Based ICE futures exchange.
The data from the EIA also showed that refineries in the US processed less crude into other kinds of fuels with their utilization rate declining from 92.3% to 91.2% during the week
Output, however, fell improving market sentiment with most traders expecting the drop in the number of il rigs actively drilling for oil to reflect in a drop in production levels.
“The relationship between falling rig counts and U.S. production remains something to watch going forward as rig counts continue to fall, but most major production forecasts remain positive for 2015 and 2016,” Tyler Richey, an analyst for the 7:00’s Report, told Market Watch.
To contact the reporter of the story: Jonathan Millet at email@example.com