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Brent crude slid below $50 a barrel for the first time since November after the latest report showed a larger-than-expected build in US crude stocks as imports surged.
Inventories of US crude rose by nearly 5m barrels in the week ended March 17, the Energy Information Administration said on Wednesday. That compared with economists for an increase of 1.8m barrels.
Stocks at Cushing, Oklahoma, a key delivery hub, rose by 1.4m barrels, compared with expectations of a build of 1.1m barrels.
At 533.1m barrels, US crude oil inventories are at a record high. The rise came as imports of crude oil averaged 8.3m barrels per day last week, up by 902,000 barrels a day from the previous week.
Brent crude oil, the global marker, was down by as much as 2.5 per cent to $49.71 a barrel on the heels of the report. It hadn’t fallen below $50 since November.
Stephen Brennock at London-based broker PVM said on Wednesday morning a fall below $50 a barrel would be “a major psychological blow to bulls”.
Still, prices bounced back above $50 a barrel shortly after the plunge, with Brent trading at $50.23 by 1439 GMT.
Oil prices have slumped recently amid rising doubts on Opec’s ability to stem a supply overhang that prompted a downturn in crude prices since mid-2014.
Meanwhile, stocks of gasoline, one of the products that crude is refined into, fell by 2.8m barrels, against expectations for a draw of 2.5m barrels.