* U.S. crude inventories rise 6.8 million bpd -EIA
* Analysts had expected drop of 849,000 barrels
* GRAPHIC-U.S. inventories: https://tmsnrt.rs/2XkQF8e
(Updates with settlement prices)
By Jessica Resnick-Ault
NEW YORK, June 5 (Reuters) - Oil prices fell on Wednesday,
with West Texas Intermediate crude futures (WTI) dropping to its
lowest since January after U.S. crude inventories unexpectedly
surged, adding to concerns about slowing global growth.
Futures strengthened slightly early in the session and then
plunged after U.S. inventory data was released.
Brent futures LCOc1 settled down $1.34, or 2.2%, at $60.63
a barrel. WTI CLc1 ended $1.80, or 3.4%, lower at $51.68 a
barrel. During the session, WTI touched a low of $50.60 a
barrel, its lowest since Jan. 14.
U.S. crude, gasoline and distillate stocks rose last week,
the Energy Information Administration said on Wednesday. Crude
inventories USOILC=ECI rose 6.8 million barrels, compared with
analyst expectations for a 849,000-barrel drawdown, to their
highest since July 2017 and about 6% above the five year average
for this time of year.
"The across-the-board inventory builds makes for a very
bearish report," said John Kilduff, a partner at Again Capital.
A surge in imports and a increase in domestic production
boosted inventories, he said. Net U.S. crude imports rose last
week by 1.1 million barrels per day, while crude production
added another 100,000 bpd to a new peak at 12.4 million bpd, EIA
data showed.
"The inventory gains came despite strong demand for crude
oil from refiners and gasoline from drivers," he said.
The rise in refinery runs has paled in comparison to the
jump in imports, particularly waterborne imports to the Gulf and
West Coasts, said Matt Smith, director of commodity research at
ClipperData.
"The stock build does not help sentiment in the current
market environment," ING bank said.
Oil prices have fallen sharply on concerns about slowing
demand, but won some respite on Tuesday after a global stock
market rally on hopes the Fed may trim interest rates. Equities
extended gains on Wednesday. "Yesterday's upswing on the back of rising stock markets was
halted by an unexpectedly sharp rise in U.S. crude oil and
product stocks," Commerzbank said.
The oil market has been weighed down by concerns about
slowing global growth due to the U.S.-China trade war and
President Donald Trump's threats last week to place tariffs on
Mexican imports.
To prevent oversupply and prop up the market, the
Organization of the Petroleum Exporting Countries, together with
allies including Russia, has withheld some production since the
start of the year.
The group will set its policy when it meets later this month
or in early July.
Underlining concerns about oversupply, the head of oil giant
Rosneft Igor Sechin said on Tuesday that Russia should pump at
will and that he would seek compensation from the government if
cuts were extended. A Gazpromneft official said Russian oil companies are ready
to boost output if the supply cuts are eased. Russia's average oil output was 10.87 million barrels per
day (bpd) on June 1-3, down from an average of 11.11 million bpd
in May, two sources familiar with official data said.
The decline follows the discovery in mid-April of
contaminated Urals crude in the Druzhba pipeline to Europe.
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U.S. crude inventories, weekly changes since 2017 png https://tmsnrt.rs/2XlX17b
Russian, U.S. & Saudi crude oil production png https://tmsnrt.rs/2EUHeFO
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