By Kim Khan
Investing.com – Oil prices were down in midday trading Wednesday, although off their lows as the market digested another huge jump in U.S. crude product inventories that kept oversupply concerns center stage.
While the Energy Information Administration reported a bigger-than-expected decline in crude stockpiles for last week, gasoline and distillate product inventories surged again.
WTI Futures fell 0.8% to $57.83 and had touched a five-week low of $57.38 earlier.
London Brent , the global benchmark, fell 0.7% to $64.02. Earlier in trading it hit a five-week low of $63.56, after a four-month high of $71.22 just a week ago, right after the Iranian missiles strike at the US-Iraqi airbases.
Oil inventories fell by 2.55 million barrels for the week ended Jan. 10, the EIA said. Analysts were looking for drop of 474,000 barrels.
Gasoline inventories jumped by about 6.7 million barrels, compared with expectations for a build of about 3.4 million barrels. Distillate stockpiles soared by about 8.2 million barrels, versus expectations for a rise of about 1.2 million barrels.
“The builds in products continue to stun just about anyone in this market,” Investing.com analyst Barani Krishnan said. “For a second week in a row, total petroleum supply is up by an eye-watering 14 million barrels plus.”
“This is no small increase and proves that refiners are cranking out products like there’s no tomorrow,” Krishan added.
Refinery runs haven’t really spiked, keeping to the recent trend of above 92% of capacity, while imports are north of 6.5 million barrels, which aren’t too surprising, he said.
“It’s just that the sheer product turnout itself has been extremely high,” Krishnan added.
“Add to all that the new record high in U.S. crude production, at the magical 13 million barrels per day number, and the OPEC report predicting lower demand for its own oil, and the bear story in oil just writes itself.”