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Oil Sinks to Multi-Year Lows After Bearish EIA Reports

January 6, 2016 at 21:16 by Vladimir Vyun

Crude oil prices plunged to multi-year lows today after the seemingly bullish report from the US Energy Information Administration that actually hurt the commodity badly. The EIA reported that US inventories of crude shrank by 5.1 million barrels last week instead of rising by 0.7 million as was predicted by specialists. Yet the same report also showed a build-up by 10.6 million barrels of gasoline supply, the biggest gain since 1993. The surge of gasoline stockpiles does not bode well for energy prices.

On top of the bad news, the previous Large Bounce House negative factors remain in place. Tensions between Iran and Saudi Arabia mean that there cannot be a meaningful dialog regarding cutting production as a measure to support prices. Meanwhile, the string of poor economic data from China promises waning demand for fuel and energy as global economic slowdown intensifies.

February contract for delivery of WTI crude oil sank 5.5 percent to $33.99 per barrel as of 21:12 GMT on NYMEX today. Brent crude tumbled 5.79 percent to $34.31 per barrel on ICE.

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