Stockpile Hike Leads to Plunging Oil Prices

Oil jumps on Mideast tensions London attacks hurt sterling stocks subdued

Oil jumps on Mideast tensions London attacks hurt sterling stocks subdued

Brent crude futures were trading at $49.94 per barrel at 0041 GMT, down 18 cents, or 0.4 per cent, from their last close. Brent is 7 percent below its open on May 25, when OPEC said they, along with producers outside of the group such as Russian Federation, would extend their oil output cuts through to the first quarter of 2018.

Crude inventories USOILC=ECI rose by 3.3 million barrels in the week ended June 2, compared with expectations for a decrease of 3.5 million barrels, the Energy Information Administration said.

If the EIA reports a draw, it would be the ninth straight decline for United States crude oil inventories, which could support oil prices.

Crude prices, in addition, continued to remain under pressure after several Saudi-led Gulf states cut diplomatic ties with Qatar on Monday claiming national security concerns.

OPEC's largest producer Saudi Arabia saw its production fall to 9.93 million barrels per day in May, down 40,000 barrels per day from the previous month, as survey panelists said exports were down significantly despite a rise in direct crude burn. But stubbornly high fossil fuel inventories - which have been maintained worldwide, but are most readily measured in the US due to open customs data - have prevented the measures from buttressing oil prices in a lasting way.

Marex Spectron said that the demand outlook for coming weeks from refineries was strong, also supporting prices.

According to the latest official data, the Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on Monday at $48.58 for a barrel of 159 litres.

As Qatar is one of the OPEC member countries, this unprecedented move has instantly drawn world attention to the oil-producing region, sending shockwaves through the oil markets.

Crude stocks at the Cushing, Okla., delivery hub fell by 1.4 million bbl, the EIA said.

But tensions within the Organization of the Petroleum Exporting Countries could potentially impact on an agreement to cut production in order to support global prices.

Analysts say the cuts have created a floor for oil prices, which has benefited USA shale producers, who are aggressively expanding their operations and raising their oil exports.

Distillate inventories also rose this week by 1.75 million barrels, while inventories at the Cushing, Oklahoma, site fell by 1.56 million barrels.

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