The increase in U.S. crude inventories shows no sign of a slowdown, and supplies are holding around an 80-year high despite declines in the number of rigs drilling for oil.
Oil futures settled below $50 a barrel after U.S. government data Wednesday showed a bigger-than-expected jump in weekly crude inventories. On the New York Mercantile Exchange, crude for delivery in March settled at $48.84 a barrel, down $1.18, or 2.4%. Prices dropped more than 5% on Tuesday. Brent crude for March delivery fell $1.77, or 3.1%, to $54.66 a barrel on London’s ICE Futures exchange.
Early Wednesday, the U.S. Energy Information Administration said crude inventories rose 4.9 million barrels for the week ended Feb. 6 to total 417.9 million barrels—the “highest level for this time of year in at least the last 80 years,” the EIA said. Media reports in recent weeks have said that stockpiles are at around 80-year highs, but actual data from the EIA only go back to the 1980s and the total is the highest on record based on that. The weekly increase was much larger than the 3.4 million barrels analysts polled by Platts expected. Also, late Tuesday, data from industry group the American Petroleum Institute reportedly showed that U.S. crude stocks rose by a smaller 1.6 million barrels in the latest week. “The world is awash in crude oil while demand forecasts for petroleum products are still lackluster at best,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary.
The EIA report showed that gasoline supplies also climbed by two million barrels, while distillate stockpiles fell 3.3 million barrels.