By April 19, 2017 0 Comments Read More →

Oil prices fall on surprise gasoline build, supplies concern

Oil prices

Oil prices dropped sharply in trading on Wednesday following the EIA report showing a smaller than expected drop in US crude stocks. Anadarko photo.

Oil prices down to two-week low

On Wednesday, oil prices fell to a two-week low on data showing a smaller-than-expected reduction in overall crude stocks and an increase in gasoline inventories.

US crude futures settled down $1.97 to $50.44/barrel, a 3.8 per cent fall.  This is the worst-one day drop since March 8 as investors bailed out of long positions after bearish inventory numbers were released.

The US Energy Information Administration reported US crude stocks fell by 1 million barrels last week, a small drop than anticipated.  Gasoline stocks showed a gain of 1.5 million barrels with heavier refining activity.

Oil prices were pressured on Wednesday by the gasoline build, an increase in US shale production and imports from OPEC member nations.

With the increase in US shale production, analysts are concerned that the boost in supply will overshadow the production cuts made by OPEC and some non-OPEC members.

US production rose to 9.252 million b/d last week, the highest since August, 2015.

“They drop production, we add production, and so at end of the day it’s ugly,” Robert Yawger, energy futures strategist at Mizuho Americas told Reuters.

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