Oil prices fell to fresh six-month lows below $93 a barrel Wednesday in Asia after a report showed U.S. crude supplies surged more than expected last week. In the US trading session oil continued to decline to drop to 92.00 bouncing back later to 93.20
Benchmark oil for June delivery was down $1.22 to $92.76 a barrel, the lowest since November, at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 80 cents to settle at $93.98 in New York on Tuesday, and closed below that on Wednesday. Brent crude for July delivery was down $1.14 at $110.31 per barrel in London.
The American Petroleum Institute said late Tuesday that crude inventories rose 6.6 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1.5 million barrels.
EIA figures release on Wednesday contradicted the API report stating “U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.1 million barrels from the previous week. At 381.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.”
Markets rely on the API estimates as an indicator of the Energy Admin. actual figures released on Wednesday. Lately the API estimates have been far off base.
Inventories of gasoline fell 2.6 million barrels last week while distillates tumbled 1.6 million barrels, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.
Crude has plunged more than 12 percent from $106 earlier this month amid investor concern global economic growth will slow more than previously expected this year. U.S. crude inventories are at a 22-year high amid weak demand and growing production.
Greece announced Tuesday it would hold new elections, probably next month, after politicians failed to form a government after a vote earlier this month. Traders fear Greece may drop the euro currency, which could trigger a loss of confidence in other debt-burdened European countries such as Spain and Italy.
Europe is already teetering near recession this year, and further political turmoil could hurt economic activity and demand for crude.
“The chances that Greece will leave the euro-zone sooner rather than later are growing,” Capital Economics said in a report. “The key question remains whether the policymakers can prevent contagion effects from prompting a bigger and much more damaging breakup of the currency union.”