Supply Continues to Exceed Demand in Oil

Oil prices tumbled to their lowest level in seven months last week as high oil inventories continued to erode confidence in the ability of major producers to ease a global supply glut.

The U.S. Energy Information Administration (EIA) reported a smaller-than-expected decline in crude-oil stockpiles last week, pushing prices below $45 a barrel to the lowest levels since November. Meanwhile, gasoline stockpiles rose.

Oil has fallen more than 16 percent this year, despite an agreement between the Organization of the Petroleum Exporting Countries and other major oil producers to limit production and cut down an overhang of crude in the market. In May, OPEC and 10 other crude-oil producers agreed to extend the deal to cut output by 1.8 million barrels a month until March.

However, signs of persistently high crude inventories have derailed their efforts to boost prices.

Crude-oil stockpiles decreased by 1.7 million barrels in the week ended June 9, according the EIA. That fell short of expectations for a 2.6 million barrel drop from analysts and traders surveyed by The Wall Street Journal.

Meanwhile, stockpiles of oil products increased, with gasoline inventories rising by 2.1 million barrels, which confirmed the decrease in demand during a time of year in which fuel supplies rarely build.

Source: Wall Street Journal