Oil prices stabilize after falling on supply increase

Oil prices stabilize after falling on supply increase

2 July 2015, 13:13
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Oil prices stabilized on Thursday after a sharp drop in the previous session as data showed an unexpected increase in U.S. oil stockpiles last week due to increased production.

August Nymex crude oil edged up 0.17% to $57.05 a barrel after ending the previous session down 4.2%.

August Brent climbed 0.52% to $62.33 after falling 2.5% in the previous session.

The U.S. Energy Information Administration said in its weekly report on Wednesday that crude stockpiles rose by 2.4 million barrels in the week to June 26. Oil prices plunged after the news with WTI falling by more than 4% on Wednesday and Brent dropping by 2.5%.

The consensus prediction had been for a decline of 2 million barrels.

At 465.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years, adding to fears over a global supply glut.

Since April, it was the first supply build.

“Traditionally, refineries run additional crude in the summer months to meet the driving season’s increased demand for gasoline, hence draw was anticipated,” said Michael Poulsen, oil analyst at Global Risk Management.

“The report also pointed to increased U.S. output from the Gulf of Mexico, adding to already swelling global supply glut.”

Meanwhile, talks on the Iranian nuclear agreement continue after the West and Tehran extended their self-imposed deadline earlier this week.

A final deal to curb Iran’s nuclear program is expected to give way to the lifting of Western sanctions and release more Iranian crude on the global market.

The global markets still see oil production exceeding demand in the wake of the U.S. shale boom and a decision by the Organization of Petroleum Exporting Countries last year not to reduce production.

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