Crude suffers massive nosedive, amid unexpected U.S. inventory build
Investing.com -- WTI crude futures took a massive nosedive on Wednesday suffering one of its worst one-day falls in nearly three months, amid a surprising build in U.S. stockpiles last week.
On the New York Mercantile Exchange, WTI crude for August delivery fell nearly 4.5% on the session, experiencing its lowest one-day decline since April 8. For the day, Texas Long Sweet futures dove 2.61 or 4.39%, settling at $56.86 a barrel. Previously, WTI crude had not closed under $57 since late-April.
On the Intercontinental Exchange (ICE), brent crude for August delivery also fell sharply. At one point, Brent crude futures declined by more than 2.5% to close under $62 for the first time since mid-April. Brent crude settled at 61.91, down 1.68 or 2.64%.
The spread between international and U.S. domestic benchmarks of crude stood at 5.05, above Tuesday's level of 4.16.
In its Weekly Petroleum Status report, the U.S. Energy Information Administration (EIA) saidU.S. crude inventories last week rose by 2.4 million barrels, halting an eight week streak of weekly draws. U.S. crude stockpiles are now at 465.4 million barrels, near its highest level at this time of year in at least 80 years. Analysts had expected a draw of 2 million barrels.
Meanwhile, the EIA said total motor gasoline inventories fell by 1.8 million barrels last week while, while distillate stockpiles increased by 0.4 million barrels. Refineries nationwide operated at 95.0% of their operable capacity for the week ending June 26, up from 94.0% a week earlier.
The unexpected build came one day after the EIA said U.S. crude output increased to 9.7 million barrels per day in April, its highest level in nearly 45 years. While domestic crude production fell by 9,000 barrels per day last week, it still remained at 9.595 million bpd, more than a million bpd higher than its level last year at this time.
Increases in U.S. inventories and production are viewed as bearish for crude, amid a glut of oversupply in global markets. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose 0.57% to 96.30, ahead of Thursday's U.S. jobs report. The dollar has appreciated sharply in three of the last four sessions as it nears a three-week high.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
On Tuesday WTI crude ended a five-day skid, soaring 1.90% to 59.44 barrel after Iran and a group of western powers pushed a deadline for a final agreement on a comprehensive nuclear accord back to early next week.