Oil slumped to a two-week low on Wednesday, after U.S. data showed a smaller-than-expected drop in overall crude stocks and a surprising build in gasoline inventories, which raised worries about excessively high global supply.
U.S. crude futures settled down $1.97 to $50.44 a barrel, a 3.8 percent drop, the worst-one day decline since March 8, as investors bailed out of long positions in response to the bearish inventory figures.
U.S. crude stocks fell 1 million barrels in the latest week, according to the U.S. Energy Information Administration, less than anticipated. Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity.
The surprise build in gasoline, along with an increase in U.S. production and imports from OPEC nations, pressured prices.
A global crude glut has persisted even as the Organization of the Petroleum Exporting Countries and other producing countries have worked to reduce output under an agreement to cut supplies almost 1.8 million barrels per day in the first half of 2017.
U.S. stockpiles and production have cast doubt on whether the OPEC cuts were enough. U.S. production rose to 9.252 million barrels a day in the most recent week, the highest since August 2015.
“They drop production, we add production, and so at end of the day it’s ugly,” said Robert Yawger, energy futures strategist at Mizuho Americas.