“The numbers were a total surprise with crude showing a build when the whole Street was forecasting a draw”, Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York, said.
It also added that North Sea Brent has been trading $5 per barrel more than WTI since the beginning of this year, and it will continue through 2016.
The front-month futures contract in U.S. crude CLc1, which expires on Thursday, was down $1.80, or 4 percent, at $40.82 a barrel by 11:49 a.m. EDT (1549 GMT). Those projections are $6 to $8 per barrel lower than its July outlook.
U.S. oil prices extended light early losses by about 50 cents after the data, pushing nearer a new six and a half year low. The more closely watched report from the U.S. Energy Information Administration could reveal deeper market trends when it’s released by mid-day trading.
“We see U.S. stocks rising to a potential new record high in the fourth quarter, unless of course production starts falling fast”, Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd.in London, said in a report. U.S. commercial crude oil inventories increased by 2.6 million barrels from the previous week.
Brent, the global benchmark, recently fell one cent to $47.15 a barrel on ICE Futures Europe.
“EIA’s updated projection remains subject to significant uncertainties: the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth, and the responsiveness of non-OPEC production to low oil prices“, the organisation said. That was a jolt to analysts and investors who have seen the price of oil plunge because there’s too much supply on the market and not enough demand.
Nymex oil futures have been under heavy selling pressure in recent months as worries over high domestic U.S. oil production weighed.
Saudi Arabia exported 7.365 million barrels per day (bpd) in June, up from 6.935 million bpd in May, figures published by the Joint Organisations Data Initiative (JODI) showed. Analysts had expected a decline of 1.2 million barrels.
On average, a US$1/bbl change in the price of crude oil will result in a change of US$0.024/gal in the price of wholesale and retail gasoline.