First U.S. oil inventory rise in three weeks adds to crude price pressure

By Andres Guerra Luz on 5/19/2021
U.S. strategic petroleum reserve
U.S. strategic petroleum reserve

(Bloomberg) --Oil extended losses after an increase in U.S. crude inventories added to concerns around the prospect of more Iranian oil returning to the market under a potential revival of the nuclear deal.

Futures in New York tumbled as much as 5.2% on Wednesday. Domestic oil stockpiles grew by 1.32 million barrels last week, the largest increase since mid-March, according to a U.S. government report. Traders had been expecting a much smaller inventory rise.

Prices were already under pressure as broader markets tumbled on inflation concerns and as talks continue on the Iran nuclear deal. Iran said it will soon export oil from a new port, while the Persian Gulf country’s deputy foreign minister told state television he sees “good progress” being made in the talks. Still, some key issues remain, he said.

West Texas Intermediate crude futures for June delivery fell $2.57 to $62.92 a barrel at 10:35 a.m. in New York. Brent for July settlement slid $2.50 to $66.21 a barrel on the London-based ICE Futures Europe exchange.

This week’s Energy Information Administration report provides the first look at the impact of Colonial Pipeline’s system outage, which had spurred panic-buying and supply disruptions across much of the U.S. Southeast and East Coast last week. U.S. Gulf Coast fuel inventories jumped by the most on record with the pipeline down.

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