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Crude Oil Seeks Direction After Overnight Slump

March 9, 2017 at 0:41 by Vladimir Vyun

Crude oil futures traded little changed during early Thursday’s trading following the overnight slump. It was the biggest drop in more than a year and it drove prices to the lowest level this year. The huge dive was caused by the unexpectedly big build-up of US inventories.

The Energy Information Administration reported that US stockpiles swelled by 8.2 million barrels last week. The tremendous increase was far bigger than the modest forecast of 1.1 million made by analysts. The report from the American Petroleum Institute released on Tuesday showed even bigger increase by 11.6 million barrels.

Kuwait Oil Minister Essam Al-Marzouq said that OPEC’s compliance with the production cut agreement was at 140% while non-OPEC producers showed compliance in the neighborhood of 50%-60%. Such high compliance from the Organization of Petroleum Exporting Countries was achieved thanks to Saudi Arabia cutting its output by 40% more than it was agreed upon. Yet apparently, traders considered the swelling US oil reserves as a proof that the output cut deal failed to re-balance the market, removing excessive supply.

Futures for delivery of WTI crude oil in April gained 0.18% to $50.37 per barrel as of 00:19 GMT on NYMEX today after plummeting 5.4% on Wednesday and falling a little at the start of Thursday’s trading session. Contract for delivery of Brent crude in May settled 5.03% lower at $53.11 per barrel on ICE.

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