(Reuters) – Oil prices fell on Wednesday after the U.S. government reported record-high crude inventories, adding to anxieties about the global glut that has pressured the market since last summer.
The U.S. Energy Information Administration (EIA) said domestic crude oil stocks rose by almost 9 million barrels last week to reach nearly 407 million, their highest since the government began keeping records in 1982.
A Reuters poll on Tuesday had forecast a build of just above 4 million barrels for the week to Jan. 23. The American Petroleum Institute, an industry group, had estimated a far bigger growth of nearly 13 million barrels.
Oil prices, lifted by a weaker dollar in the previous session, retreated on Wednesday after the EIA data.
Benchmark Brent crude oil LCOc1 was down 84 cents at $48.76 a barrel by 1:07 p.m. ET (1807 GMT), after making a session low at $48.65.
U.S. crude CLc1 dropped $1.39 to $44.84, after falling to $44.52 earlier.
Traders said they expected crude prices to come under further pressure in coming days despite the EIA report citing positives like a near 3 million barrel drop in gasoline stocks and almost 4 million barrel decline in diesel and heating oil inventories. [EIA/S]
“The sub-90 percent refinery utilization is causing oil supplies to back up, and the downward pressure on prices should continue,” said John Kilduff, a partner in New York energy hedge fund Again Capital.
“Refined product demand continues to be the sole source of strength for the market, but it is not enough to overcome the tidal wave of crude oil supplies for now.”
Fast-growing U.S. shale output has pushed oil prices almost 60 percent lower since June, with losses accelerating after the Organization of the Petroleum Exporting Countries said it would not cut production in a bid to preserve its market share.
Goldman Sachs analysts said in a Tuesday note that they expected U.S. crude, also known as WTI, to remain near $40 a barrel in the first half of this year.