Oil prices fall with rising global glut concerns

Oil jumps on Mideast tensions London attacks hurt sterling stocks subdued

It recovered from its own overnight dip to hit $46 a barrel this morning.

Overall, inventories of crude, gasoline, jet fuel, diesel and other refined products increased by 15.5 million barrels last week.

As traders reacted, analysts such as Bjarne Schieldrop, chief commodities analyst at SEB Markets, called for calm: "The market just has to be patient; we think inventories are going to be close to normal by the end of the year", he said.

MarketWatch says the EIA data shocked the market "in more ways than one".

The headline inventory draw in the American Petroleum Institute (API) data was higher than expected at 4.6 million barrels for the latest week following an 8.7 million decline the previous week and there was a further significant decline in Cushing inventories.

The 3.3-million barrel rise in US crude stocks deepened concerns that the ongoing production cuts by the Organization of the Petroleum Exporting Countries and Russian Federation aren't effectively reducing the glut of oil that has suppressed oil prices for over two years.

"US oil stocks have actually fallen for several weeks now, suggesting the glut may be falling after all".

The oil price is sliding again this afternoon after sentiment turned negative again amid a diplomatic row in the Middle East.

Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates all cut ties with Qatar on Monday, accusing it of meddling in their internal affairs and backing terrorism.

The unexpected buildup of supplies shook an already anxious market.

There are already doubts the effort to curb production by nearly 1.8 million bpd is seriously denting exports. Acrimony within the group could undermine these efforts to rebalance the market.

"The OPEC agreement stands and is highly unlikely to change because of tension with Qatar".

In addition, if the row rolls on, it may prove hard to keep oil shipments moving along the strategically important Strait of Hormuz waterway.

August Brent crude also fell down 1% or 48 cents closing in at $49.47 per barrel which was the benchmark's lowest settlement in the past month. All three have banned Qatar Airways flights from their airspace.

As concerns about supply persist, USA drillers have added rigs for 20 straight weeks, the longest streak in at least three decades, undercutting efforts by the OPEC to cut production and eliminate a global glut.

Oil prices fell to their lowest level in a month on Wednesday after commercial crude stocks in the US increased surprisingly against market expectations.

The unexpected increase in stockpiles spooked many market participants, raising doubts both about OPEC's effectiveness and the strength of US demand for oil and fuel.

US West Texas Intermediate futures were at $47.40 a barrel, down 26 cents.

According to Reuters, Qatar had agreed to cut 30,000 barrels a day as part of the Organisation of the Petroleum Exporting Countries' (OPEC) deal to cut production by 1.2 million barrels per day (bpd) in November, which was later subsidised by non-OPEC to 1.8 million bpd.

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