Crude futures plunged after data showed that US stockpiles grew at their highest rate since 2001 and Saudi Arabia announced that output had reached a record high in March
US government data showed that US crude inventories grew by 10.95 million dollars-the biggest weekly rise in 14 years- to a record 482.39 million barrels.
Stockpiles at Cushing, Okla., an important storage and delivery point for the benchmark West Texas Intermediate contract, expanded by 1.2 million barrels during the week, much more than forecasted.
The US data added onto losses triggered by an announcement by Saudi Arabia that its oil production rose to a record 10.95 million barrels per day in March.
Light, sweet crude for May delivery fell $3.56 to $50.42 a barrel on the New York Mercantile Exchange to record their largest one day drop since February 4th. The US benchmark is now 5.4% in the red for the year.
Brent futures, the European benchmark, tumbled $3.55 or 6% to $55.5 a barrel on the London-based ICE Futures Exchange.
“Today’s data seem to confirm that last week’s fall in oil production and relatively small increase in crude stocks were more of a blip than a sign that the current upward trend in output and stocks was coming to an end,” Thomas Pugh, commodities economist at Capital Economics, told MarketWatch
Crude prices had rallied Monday on Tuesday on strong signs of growth in Asian demand and the expectation that austerity cuts by oil companies would lead to substantial production drops.
The rally was however cut short by data from the Energy information Administration reported modern record growth in the country’s inventories.
Production in Iraq and Libya also grew in March with the total OPEC output growing to 31.5 barrels per day during the month.
“With such a level of OPEC production it will be difficult to escape large stock-builds throughout the year,” analyst Olivier Jakob at Swiss-based Petromatrix, told Reuters.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org