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US Crude Falls Under $45 After Small Drop in Stockpiles

June 14, 2017 at 16:52 by Andrew Moran

Oil prices are cratering on Wednesday as new government data show a smaller-than-expected decline in stockpiles. Oil futures have plummeted nearly 4% and are suffering the worst drop in more than three months.

July West Texas Intermediate (WTI) crude futures tumbled $1.74, or 3.75%, to $44.72 per barrel at 16:36 GMT on Wednesday on the New York Mercantile Exchange. US crude has not traded under $45 since August 2016 and has plunged 21% year-to-date.

Brent, the international benchmark for oil prices, is also being pummeled midweek. August Brent crude futures slid $1.79, or 3.67%, to $46.93 a barrel on London’s ICE Futures exchange. The last time Brent crude prices traded at these levels was in August 2016. Year-to-date, Brent has dropped about 20%.

The US Energy Information Administration (EIA) reported on Wednesday that domestic crude stockpiles dipped by 1.7 million barrels for the week ending June 9. Analysts had expected as late as Tuesday a decrease of 2.8 million. Government data also revealed that gasoline stocks climbed by 2.1 million barrels and distillate supplies rose by 328,000 barrels.

Investors were in further upheaval on Wednesday when the International Energy Agency (IEA) published its monthly report. The IEA warned that the planet’s oil oversupply will continue throughout 2017, even as the Organization of the Petroleum Exporting Countries (OPEC) extends its oil put freeze of 1.8 million barrels per day (bpd) by an additional nine months.

This comes as OPEC released a report on Tuesday that found the oil cartel’s production increased by 1% in May because of gains made by Iraq, Libya, and Nigeria. Libya and Nigeria were exempt from OPEC’s arrangement last month.

Overall, oil stockpiles are inching towards all-time highs in many parts of the globe, and non-OPEC producers are ramping up output, particularly the US. Over the last 12 months, US output has spiked by more than 10%, and most experts do not see this slowing down anytime soon.

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