Oil prices tumble after surprise jump in USA crude supplies

"Where oil (price) ultimately goes is going to be driven by inventories", said Greg McKenna, strategist at AxiTrader, another futures brokerage.

Brent crude prices were at $48.20 per barrel, down 3.8 percent, or $1.92 a barrel.

According to the Energy Information Administration (EIA), crude inventories surprised traders with a 3.3 million barrel rise in the week-ended June 2. Official data by the EIA will be published later on Wednesday. The analyst was referring to former FBI Director James Comey's appearance before Congress, the European Central Bank's policy meeting and the United Kingdom general election, all later on Thursday.

Traders said an ongoing fuel supply overhang was keeping prices under pressure despite the agreement by Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC produces to extend its cuts of nearly 1.8 million barrels per day (bpd) of production.

U.S. Gasoline stocks also rose by 3.3 million barrels.

Brent crude futures, the global benchmark, were trading down 0.84 per cent at $49.70 a barrel at the time of publishing.

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

Futures slid 0.3 percent in NY.

As the de facto leader and largest producer of OPEC, Saudi Arabia has cut its production the most of any member of the bloc.

USA crude production has ranged by around 9.3 million barrels a day in the past four weeks which is probably why the government will be expecting production to reach 10 million barrels a day by next year. The agency cut its 2018 forecast for West Texas Intermediate crude, the US benchmark, by 2.7 percent from May.

Oil prices rallied sharply during the U.S. session on Tuesday with WTI moving back above the $48.0 p/b level with anticipation that there would be a further decline in oil inventories.

Global oil prices turned lower Thursday, after posting their sharpest fall since early March overnight on an unexpected build in USA crude inventories last week.

"These tight oil producers are the new swing producers, so every time OPEC tries to influence prices by cutting production you see the tight oil market step in which is why we have an upside limit".

  • Zachary Reyes