On Wednesday, oil prices fell more than four percent after the U.S government stunned the market with bearish inventory data, adding concern to the global surplus of oil. U.S crude oil stockpiles fell less than expected last week, according to the Energy Information Administration. Distillate inventories rose the most since January, and gasoline posted a build that came as a surprise during the summer season. The U.S inventory report pressured prices in a market still sluggish after the Paris-based International Energy Agency warned about the global supply glut.
“The products markets will continue to put a weakness in the energy complex,” said Tariq Zahir, a trader in crude oil spreads at Tyche Capital Advisors in New York.
Paris-based IEA, which advised industrialized nations on energy policies, said crude stockpiles continued to rise last month, pushing floating storage to the highest level in seven years.
“Stocks are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices,” the Paris-based group said.
The U.S. government’s EIA said crude inventories fell 2.5 million barrels last week, which was less than the 3 million-barrel drop forecasted. Distillate stockpiles including both diesel and heating oil, rose 4.1 million barrels, versus general expectations for a 256,000-barrel increase, the EIA data showed. Gasoline stocks rose unexpectedly by 1.2 million barrels, compared to the 432,000-barrel drop that was forecasted. The gasoline builds particularly jolted some analysts because it came during the week of the July 4th holiday, typically marking the busiest U.S. driving period. “Miles driven this July holiday was expected to be a record-high and demand at the pump was expected to reflect that point,” said Troy Vincent, an analyst at New York-based crude cargo tracker Clipperdata. “It’s not that it’s some historical anomaly, but it is continuing this trend of crude-glut-turned-gasoline-glut.”