Investing.com -- Stockpiles of U.S. crude rose sharply, the Energy Information Administration said Wednesday, confounding analyst expectations.
Oil inventories jumped 5.7 million barrels for the week ended June 5, the EIA said. That compared to estimates for a draw of 1.7 million barrels, according to estimates compiled by Investing.com. Inventories fell 2.1 million barrels in the previous week.
WTI futures traded down 2.24% right after the report and remained lower.T hey were down 2.16% ahead of the release. Oil prices have rebounded in recent weeks after tumbling because of low demand during the Covid-19 shutdowns. West Texas Intermediate trades at around $38 a barrel, but Wednesday's EIA report signals the price could drift lower.
"This is a market that should be trading closer to $30 a barrel than $40," said Investing.com commodities analyst Barani Krishnan.
"For crude inventory alone, it is more like a build of nearly 8 million barrels if you take into consideration the additional 2.2 million that went into the Strategic Petroleum Reserve," he said. WTI crude stored at Cushing, Oklahoma, saw a decline of 2.3 million, but "we are still building too much on the week to support these sort of prices."
Gasoline inventories rose 866,000 barrels, compared to an expected build of 70,000 barrels, the EIA said. They are about 11% above the five-year average for this time of year.
One bright spot, Krishnan said, was evidence that production was falling. Production is estimated around 11.1 million barrels per day, or 2 million bpd below the record high production of 13.1 million bpd seen three months ago.