United States oil prices fell Thursday, after a rise in gasoline inventories pushed oil stocks to record high prices, while at the same time heightening worries of a global oversupply. U.S. crude and oil product rallied by 2.62 million barrels in the week to July 15, to an all-time high of 2.08 billion barrels, said the U.S. Energy Department. American gasoline stocks gained 911,000 barrels in the wake of July 16th, despite previous forecasts for no change. The stocks ended well above the upper limit of the average range, as reported by the U.S. Energy Information Administration.
Tamas Varga, an oil analyst at PVM Oil Associates in London, said that the build within U.S. oil inventories is reflecting a well-supplied global market. “There is lots of oil around,” he said. “Market strength is not sustainable”.
U.S. sweet crude for September delivery, which is the new front-month contract, CLc1 fell by 10 cents to hit $45.65 a barrel. The August contract expired Wednesday after rallying by 29 cents, to settle at $44.94 a barrel. Benchmark Brent crude futures LCOc1 fell by 10 cents to hit $47.07 a barrel. U.S. crude oil stocks fell for a ninth straight week, by dropping 2.3 million barrels. However, at a strong 519.5 million barrels, crude oil inventories across the country are at their highest levels for this time in the year.
Hans van Cleef, senior energy economist at ABN AMRO, said that investors were largely concerned by the global oversupply, coupled with high inventory levels. “Near-term there are still some downside risks,” he said, forecasting Brent to slip around $5 lower to hit $42 a barrel.
Considering the month of July is the peak of summer, Americans traditionally take on the road, which drives up gasoline demand. However, a glut of these refined products has worsened an already negative crude outlook for 2016 and 2017. Traders are worrying as the spread of near and future delivery prices are reaching its widest scope in over five months.