US Oil Inventory Hits Record High

Global oil prices reversed course and took a hard fall in late trading on Wednesday after the release of the US EIA inventor report. World oil prices fell on Wednesday after the four prior sessions of gains. Traders focused on the ongoing climb in oil supply after the release of weekly inventory data. US crude stockpiles rose by 6.3 million barrels last week to a record 413 million barrels. Brent crude fell by $2.99 or 5.2 per cent to $54.17 a barrel while US Nymex crude fell by $4.60 or 8.7 per cent to $48.45 a barrel.

A rebound in oil prices fizzled out as the contract for U.S. crude dropped 8 percent to $48.88 a barrel. The government reported that crude inventories jumped last week. Oil prices rebounded in Asia on Thursday but gains were capped as the euro was hit by fresh concerns over Greece, further hurting demand in the face of an oversupply, analysts said. Crude oil is trading at $48.73 and Brent oil is at $54.69 in the morning session.

Oil prices tumbled 8.7% on Wednesday, halting a robust four-day rally, after data showed that U.S. crude supplies had climbed to their highest level in about 80 years. U.S. crude-oil supplies rose by 6.3 million barrels in the week ended Jan. 30 to 413.1 million barrels, the U.S. Energy Information Administration said Wednesday. Analysts surveyed by The Wall Street Journal had expected a gain of 3.7 million barrels. Stockpiles are at the highest level ever in EIA weekly data going back to August 1982. In monthly data, which don’t line up exactly with the weekly data, inventories haven’t been this high since 1930. Gasoline and distillate inventories increased as refiners’ boosted throughput, data from the Energy Information Administration showed on Wednesday. Gasoline stocks rose by 2.3 million barrels, compared with analysts’ expectations in a Reuter’s poll for a 67,000-barrel gain.

Adding to the bearish picture, gasoline stocks on the U.S. East Coast reached their highest since June 1999, jumping to 68.5 million barrels from 64.3 million barrels the previous week.

Crude has lost more than half its value since June, when prices were at more than $100 a barrel.  Global supplies have been boosted by surging US shale oil production and a decision by the Organization of the Petroleum Exporting Countries in November to keep current output levels. Still, the scale of today’s shale-oil boom is greater. The U.S. produced 2.5 million barrels of oil a day in 1930, according to the U.S. Energy Information Administration, compared to 9.2 million barrels a day last week.

Crude prices on Wednesday snapped a three-day rally, with WTI sinking 8.7% owing to mounting stockpiles. Analysts said Thursday’s rebound was unlikely to be supported after the single currency retreated on news that the European Central Bank had cut off Greek banks’ access to a key source of much-needed cash. In a decision that rattled global financial markets, the ECB said on Wednesday it would no longer allow Greek banks to use government debt, which has a junk rating, as collateral for loans.