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Crude Oil Slumps After Unexpected Growth of US Inventories

December 21, 2016 at 21:34 by Vladimir Vyun

Prices for crude oil fell today after the unexpected build-up of US inventories. The Energy Information Administration said that US reserves of crude oil increased by 2.3 million barrels last week. The report was totally opposite to market expectations of a drop by roughly the same amount and data from the American Petroleum Institute released on late Tuesday that showed a drawdown of 4.1 million. It is important to note that the EIA report was not totally bearish as it showed a decline of gasoline inventories and distillate stockpiles.

News that Libyan oilfield of Sharara is going to resume production that was halted due to the threat of local militants. Considering that Libya is exempt from the deal for a production cut made by the Organization of Petroleum Exporting Countries, an increase of supply for the North African country may hurt attempts of the OPEC to rebalance the oil market and ease global surplus. With that said, political and armed conflicts may yet disrupt supply from Libya.

Contract for delivery of WTI crude oil in February dropped 1.39% to $52.56 per barrel as of 21:21 GMT on NYMEX today. February Brent crude declined 1.45% to $54.55 per barrel on ICE.

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