Oil prices down after bearish U.S. stock data adds to glut warning

Oil prices

Oil prices fell on Wednesday after the US government reported that stockpiles fell less than expected and gasoline and distillate inventories rose. Encana photo.

Oil prices fell over four per cent on Wednesday

By Barani Krishnan

NEW YORK, July 13 (Reuters) – Oil markets tumbled more than 4 percent on Wednesday, erasing most of the previous session’s gain, as a raft of bearish U.S. inventory data heightened concerns over a global glut.

U.S. crude stockpiles fell less than expected last week, distillate inventories rose the most since January and gasoline posted a surprise build, the Energy Information Administration said, painting an unusually weak demand picture during the traditionally busy summer driving season.

The EIA’s report pressured prices in a market already bearish after the world’s energy watchdog the International Energy Agency warned about a global oil supply glut, saying that crude stockpiles kept rising last month and had pushed floating storage to the highest level in seven years.

“A surprising build in gasoline in the peak of U.S. driving season and a very large build in heatingoil will set the tone for lower prices as we go forward,” said Tariq Zahir, a trader in crude oilspreads at Tyche Capital Advisors in New York.

“The products markets will continue to put weakness in the energy complex.”

Brent crude settled $2.21, or 4.6 percent, lower at $46.26 a barrel, and U.S. crude fell $2.05, or 4.4 percent, to end at $44.75.

On Tuesday, both Brent and WTI gained nearly 5 percent, their biggest daily gain since April, on shortcovering and technical buying a day after hitting two-month lows.

U.S. gasoline settled nearly 4 percent lower, while heating oil, a proxy for ultra low sulfur diesel, slumped more than 5 percent.

(Additional reporting by Karolin Schaps in LONDON; Editing by Nick Zieminski and Marguerita Choy)

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