Global oil prices extended declines Wednesday, sending U.S. crude prices to the lowest close since early January, after the U.S. Energy Information Administration reported a much larger-than-expected increase in domestic crude inventories.
The EIA said U.S. supplies rose by 2.21 million barrels in the week ending June 7, against forecasts of a 480,000 barrel gain, to take the overall supply tally to 485.47 million barrels, the highest in nearly two years. A private report from the American Petroleum Institute yesterday showed a 4.9 million barrel crude build over the same time period.
Brent crude contracts for August delivery, the global benchmark, were seen $2.09 lower from their Tuesday close in New York and changing hands at $60.20 per barrel, while WTI contracts for July, which are more tightly linked to U.S. gas prices, were marked $2.13 lower at $51.14 per barrel by the close of trading, the lowest in more than five months.
U.S. oil prices have fallen more than 22% since late April, reversing a run that began on Christmas Eve and took prices to multi-year highs, as investors began to question the strength of global crude demand as the world's biggest economies saw slowing growth amid the ongoing U.S.-China trade dispute.
The EIA trimmed its forecast for world demand yesterday to around 1.22 million barrels per day, in fact, in its regular Short-Term Energy Outlook report, a 160,000 reduction from its prior forecast. It also lowered its growth estimate for 2020 by 110,000 to 1.42 million barrels per day.
"EIA forecasts that U.S. production will increase by 1.4 million b/d in 2019 and by 0.9 million b/d in 2020, with 2020 production averaging 13.3 million b/d," the agency said. "Despite EIA's expectation for slowing growth, the 2019 forecast would be the second-largest annual growth on record (following 1.6 million b/d in 2018), and the 2020 forecast would be the fifth-largest growth on record."