Oil prices tumble 3 percent on record U.S. crude build
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By Barani Krishnan
NEW YORK (Reuters) - Oil prices tumbled 3 percent on Wednesday after a record weekly build in U.S. crude inventories stoked investor worries about a global supply glut, days after analysts estimated higher monthly OPEC crude output.
The U.S. Energy Information Administration (EIA) said crude inventories rose 14.4 million barrels for the week ended Oct. 28, far more than the 1.0 million barrels analysts had expected. It was the biggest weekly rise in U.S. crude stocks since records began in 1982, and exceeded the American Petroleum Institute's report on Tuesday of a 9.3 million-barrel build. [EIA/S]
"This is very, very, very bearish. Nothing else in the report matters," said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
U.S. West Texas Intermediate (WTI) crude
Oil markets have been volatile lately on dithering by members of the Organization of the Petroleum Exporting Countries on a production cut the group announced on Sept. 27 to rein in a crude glut that forced prices down from 2014 highs above $100. Last month, Brent hit one-year highs of $53.73 and WTI 15-month peaks of $51.93.
"There are lots of longs coming out of the market, liquidating," said Tariq Zahir, who trades long-dated WTI spreads for Tyche Capital Advisors in New York.
"I wouldn't be surprised if by the end of the week or beginning of next week, we'll get to $42 or $41 a barrel, as very few believe OPEC will make cuts that matter."
OPEC output likely reached a record high of 33.8 million barrels per day (bpd) in October, a Reuters survey on Monday showed. The group meets Nov. 30, hoping to finalize output cuts.
This week, two OPEC members indicated they were more keen to raise production than cut. Nigeria said its output has recovered to 2.1 million bpd while Libya has doubled its output since mid-September and is producing about 590,000 bpd.
The U.S. crude build came on the back of 2 million bpd jump in imports to just under 9 million bpd, the highest rate since September 2012. Prior to that, there were drawdowns in seven out of eight weeks.
"I don't think that imports will stay this high and (refinery) runs will be increasing from here," said Scott Shelton, broker and commodities specialist with ICAP in Durham, North Carolina.
"This tells me that while this is an ugly report, it's the worst we are going to see for the rest of the year."
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio)
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