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Oil Tumbles 4% as U.S. Gasoline Build Spooks Market

CommoditiesOct 21, 2020 04:30PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Oil prices tumbled as much as 4% percent on Wednesday, logging the sharpest daily loss in three weeks, as a surprise build in U.S. gasoline stockpiles spooked traders, forcing them to ignore lower crude inventories for last week.

New York-traded West Texas Intermediate, the key indicator for U.S. crude prices, settled at $40.03 per barrel, down $1.67, or 4%. The last time WTI fell 4% in a day was on Oct. 2.  

London-traded Brent crude, the global benchmark for oil settled at $41.73 per barrel, down $1.43, or 3.4%.

Crude oil inventories fell 1 million barrels for the week ended Oct. 16, against expectations for a draw of 1.02 million barrels, the U.S. Energy Information announced.

But crude stored at the Cushing, Oklahoma delivery point for contracted barrels of WTI increased by 975,000 barrels compared to an expected build of 1.1 million barrels.

Worse, gasoline stockpiles rose by 1.9 millions barrels — an 180-degree build over forecast levels.

Distillates inventories drew down by 3.8 million barrels, or double to expectations — ostensibly due to strong delivery-and-trucking activity as many people remained cloistered in their homes ordering everything from clothing to groceries. 

But the market focused on the gasoline build.

“Oil prices will struggle to break free of its autumn range until demand improves for refiners,” said Ed Moya, analyst at OANDA in New York.

The EIA also surprised traders by estimating that U.S. crude production fell by 9.9 million barrels per day last week, down 600,000 bpd from the previous week. 

The drop in production jarred with the rise in U.S. oil rigs logged since mid-September, leading some to think the impact on output from this month’s Hurricane Delta had been overestimated. Delta, which struck Louisiana as a Category 2 storm, shuttered nearly 92% of all oil production in the U.S. Gulf of Mexico.

Oil Tumbles 4% as U.S. Gasoline Build Spooks Market
 

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Comments (15)
perplexed76 .
perplexed76 . Oct 21, 2020 11:19PM ET
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"Experts" explained by a random reason. The price dropped because of Cushing inventories. The latter are as high now as they were when prices moved to negative zone half a year ago. No free space.
Pawan Jain
Pawan Jain Oct 21, 2020 10:28PM ET
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By Tuesday...Crude may be again dancing on 42....44
David Acevedo
David Acevedo Oct 21, 2020 5:45PM ET
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It's funny all the comments sound exactly like this article. Confusing!
Felipe Coutinho
Felipe Coutinho Oct 21, 2020 2:46PM ET
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demand will pick up no matter what
graham Blake
graham Blake Oct 21, 2020 1:02PM ET
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Current Rig Count should has nothing to do with current production. It takes months and years to bring wells online after initially drilling...
Allan edushare
Allan edushare Oct 21, 2020 12:48PM ET
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Bull Bear trap in play.Manipulated as usual.
Plopseven Schwartz
Plopseven Schwartz Oct 21, 2020 12:28PM ET
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A week ago, I got maybe 10 push notifications back to back from this website. Each said oil inventories had risen or fallen by different numbers. Oil is not a safe asset.
David Bennett
David Bennett Oct 21, 2020 12:19PM ET
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just predict a drawdown in inventories each week, they have a better chance of being right. No operator is running out to drill in the US at $40 bbl. keep the rigs on the ground.
Steffen vdm
Steffen vdm Oct 21, 2020 12:12PM ET
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So the conclusion is that last week the inventories either rose or fell. It's like the weatherman (or woman of course) is telling you that tomorrow it's going to rain or maybe not, temperatures will be between -20 and +40 degree celsius. And the wind is either weak or very strong, coming from the East, West, South or North
William Smith
William Smith Oct 21, 2020 11:16AM ET
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Two articles 10 hours ago both said oil inventories rose. Go figure. Pure manipulation to milk retail out of their money.
Sam Mojtabai
Sam Mojtabai Oct 21, 2020 11:16AM ET
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Yea i am confused
yannis kariotis
yannis kariotis Oct 21, 2020 11:16AM ET
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Sam Mojtabai  The post with risen oil inventories came from API ( American Petrolium Institute). The report with the fallen inventories came from EIA (  Energy Information Administration.)
dim dim
dim dim Oct 21, 2020 11:15AM ET
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oil go to $36/barell
dim dim
dim dim Oct 21, 2020 11:15AM ET
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and good luck
Crimildo Sithole
Crimildo Sithole Oct 21, 2020 10:48AM ET
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I don't understand
Nirbhay Kulkarni
Nirbhay Kulkarni Oct 21, 2020 10:48AM ET
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why inventory felled is missing and we people don't have any idea over this point and play in its price.
Mirson Ascung
Mirson Ascung Oct 21, 2020 10:47AM ET
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buy or sell ?
sohaib mushtaq
sohaib mushtaq Oct 21, 2020 10:47AM ET
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weak sell
Nirbhay Kulkarni
Nirbhay Kulkarni Oct 21, 2020 10:47AM ET
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but inventory decreased ???how to assume weak sell
Forrest Boutin
Forrest Boutin Oct 21, 2020 10:44AM ET
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I just want to make sure i understand this. So stockpiles of crude have decreased, this is bullish correct? It looks like drillers are holding back quite a bit, but hopefully the ecosystem is leveling out.
Adam lilly
Adam44 Oct 21, 2020 10:44AM ET
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not decreased much as compared to last report despite very less import.
Cristiano Dangelo
Cristiano Dangelo Oct 21, 2020 10:39AM ET
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As expected
 
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