Global oil prices slipped today after US crude stocks breached all-time highs after an unexpected surge in inventories.
According to the Energy Information Administration, crude inventories rose 5.7m barrels in the week to June 5 to 538.1m barrels, the most in history.
In response, worldwide standard Brent crude fell 1.2 per cent back to $40.60, while US benchmark West Texas Intermediate shed 1.8 per cent to $38.25 a barrel.
Analysts had been expecting stocks to fall 1.7m barrels, but an increase in exports from Saudi Arabia pushed inventories to the new highs.
Today’s surprise surge revived concerns that the market’s recovery has been too fast considering the still considerable mismatch of supply and demand resulting from the coronavirus crisis.
Earlier this week oil prices hit three-month highs as the market bounced back from April’s historic lows, which saw WTI turn negative for the first time ever.
Rystad Energy’s head of oil markets Bjornar Tonhaugen said: “Taken the development, what else can you do as a trader but rush to sell and depress the price”.
Tonhaugen added that shut-in production coming back online and offshore stocks that had been waiting to be unloaded were the likely reason for such a build.
“With equity markets edging lower, and a vast amount of good news baked into oil prices at these levels, it was no surprise that the oil market’s confidence wavered slightly,” said Jeffrey Halley, senior market analyst at Oanda.
Prices have been buoyed of late by producer cartel Opec’s decision to extend its record 9.7m barrel per day production cuts through July.
However, gains were somewhat stymied by Saudi Arabia, Kuwait and the United Arab Emirates’ decisions not to extend their additional voluntary cuts.