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US Crude Falls to Lowest Level Since April on Oversupply Concerns

July 26, 2016 at 17:32 by Andrew Moran

Oil prices fell on Tuesday as investors feared oversupply issues. Brent and US crude prices hit three-month lows due to rigorous oil drilling activities and a glut of petroleum-product supplies.

September West Texas Intermediate (WTI) crude dipped $0.28, or 0.65%, to $42.84 per barrel at 17:07 GMT on the New York Mercantile Exchange. US crude has not traded this low since April.

Brent crude pared some of its losses it incurred at the beginning of Tuesday’s trading session. September Brent crude slightly rose $0.03, or 0.04%, to $44.75 a barrel on London’s ICE Futures exchange. Brent crude prices are also trading close to three-month lows.

After hitting 12-year lows in February, oil prices have been gradually recovering by rising nearly 60%. Both crudes even surpassed $50 a barrel earlier this summer. Since then, however, oil prices have been falling.

New data published on Tuesday found that there is a glut of petroleum-product supplies. A survey by S&P Global Platts suggests that there will be a decrease of 2.6 million barrels for crude oil stockpiles. The survey also found that there will be a decline of 700,000 barrels of gasoline supplies and an extra 400,000 barrels for distillates. Breaking from the norm, there has been a huge stockpile of gasoline, even with the peak summer driving season in the US.

The data also found that there is greater activity in US oil drilling projects. For seven of the last eight weeks, according to the Energy Information Administration (EIA), there has been an increase in the US oil-rig count. Analysts are forecasting, though, that there will be a slowdown in domestic refining activities.

It was reported this month that investors are expecting another major oil glut coming to markets in the next several months. This concern has been weighing on oil prices during many trading sessions in July.

If you have any questions and comments on the commodities today, use the form below to reply.

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