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Excessive Supply of Oil & Natural Gas Leads to Drop of Prices

May 8, 2014 at 22:08 by Vladimir Vyun

Crude oil retreated today after yesterday’s rally that was caused by the drop of US stockpiles. Inventories of crude shrank by 1.8 million barrels to 397.6 million barrels last week, while analysts were expecting an increase. Experts say that the rally was an overreaction and is not supported by the supply-demand balance as there is still plenty of oil.

Prices for natural gas dropped even more as reserves were swelling. The Energy Information Administration reported that inventories climbed by 74 billion cubic feet to 1,055 Bcf last week from the week before. The actual increase was a bit above market expectations.

June futures for delivery of WTI crude oil dropped $0.51 (0.51 per barrel) to $100.26 per barrel on NYMEX as of 22:03 GMT on NYMEX today. Contract for natural gas sank $0.15 (3.23 percent) to $4.59 per million British thermal units.

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