Crude futures settled more than 5% lower on Wednesday, as U.S. crude inventories rose for a ninth straight week.
Oil prices slid to an 8-week low, after the Energy Information Agency reported a much larger increased than expected in U.S. crude inventories.
On the New York Mercantile Exchange crude futures for April delivery fell $2.86 to settle at $50.28 a barrel, while on London's Intercontinental Exchange, Brent shed $2.89 to $53.03 a barrel.
The EIA said that crude oil inventories rose by 8.209 million compared to estimates of an increase of 1.967 million barrels.
Gasoline inventories decreased by 6.555 million against expectations for a draw of 1.4 million barrels while distillate stockpiles fell by 2.676 million barrels, compared to expectations of a 0.9 million decline.
It was the ninth straight weekly rise in U.S. crude inventories and added to concerns that a supply glut could curtailed OPEC’s efforts to rebalance supply and demand in the industry.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) in an effort to combat the oversupply issue that has pressured prices over the last two years.
The supply glut in U.S. crude inventories came fresh off the heels of Saudi minister of energy Khalid A. Al-Falih’s warning on Tuesday that it will not be good for the market if the United States increases oil production too strongly in the next two years.
OPEC began implementing cuts of 1.16 million barrels per day at the start of this year for a period of six months.Source: Investing.com