Oil market tumbles as US crude inventories surge

March 24, 2016 | 10:47

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World oil prices tumbled on Wednesday on news that US crude inventories ballooned last week, worsening the stubborn global glut.

A motorist filling up his vehicle at a petrol kiosk. (Photo: AFP/Federico Parra)

NEW YORK: World oil prices tumbled on Wednesday (Mar 23) on news that US crude inventories ballooned last week, worsening the stubborn global glut.

US benchmark West Texas Intermediate (WTI) for delivery in May lost US$1.66 to US$39.79 per barrel, after five sessions spent over the $40 threshold. Brent North Sea crude for May delivery fell US$1.32 to US$40.47 a barrel.

The US Energy Information Administration reported on Wednesday that American crude oil reserves surged 9.36 million barrels last week to 532.5 million barrels.

That was almost quadruple the expectations of analysts polled by Bloomberg News. But mitigating some of that gain was a 4.6 million barrel fall in gasoline stockpiles.

"Another huge build in weekly oil inventories, coupled with dollar strength, sent oil prices lower," said CMC Markets analyst Jasper Lawler.

However, he added, given the overshoot of expectations on crude inventories, "the (price) drop is actually quite mild and could be a precursor to a higher oil price if the dollar stabilises."

AFP

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