U.S. Crude Down 3 Percent after big Stockpile Build

Oil prices tumbled on Wednesday, with U.S. crude settling about 3 percent lower, after an unexpectedly large inventory build in the world’s biggest oil consumer renewed worries about oversupply. The U.S. Energy Information Administration (EIA) said crude inventories rose 2.5 million barrels last week, versus analysts’ forecasts for a draw of 500,000 barrels.

[EIA/S] Gasoline and distillate stocks also rose, the EIA said, driving down oil prices that had mostly risen in the past two weeks on speculation of an output freeze by OPEC. U.S. West Texas Intermediate (WTI) futures settled down $1.33, or 2.8 percent, at $46.77 per barrel. Brent crude futures fell 91 cents, or 1.8 percent, to close at $49.05.

“I cannot continue to stress that at this time of year we are supposed to be getting draws,” Tariq Zahir, oil trader at Tyche Capital Advisors in New York, said, referring to the summer inventory drawdowns expected amid peak demand for motor fuels. “But instead, we’re seeing a build in every single aspect that’s quite eye opening.

The Street has gotten it wrong again, with predictions that you’ll start getting rebalancing of supply-demand in the third quarter.”

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