Crude Tumbles to Fresh Lows Following Counter Seasonal Build

Light, sweet crude for September delivery dropped $1.27, or 3%, to $41.35 a barrel on the New York Mercantile Exchange.

U.S. crude Inventories rose to 456.2 million in the week ended August. 14, the EIA report said.

Brent North Sea crude for October delivery, the global benchmark, fell 54 cents to US$46.62 a barrel in London. That was a jolt to analysts and investors who have seen the price of oil plunge because there’s too much supply on the market and not enough demand.

Oil has slumped more than 33 per cent since this year’s closing peak in June amid signs the surplus that drove prices into a bear market will persist.

Energy companies invested heavily in drilling over the past few years, when the price of oil was generally over US$100 a barrel. US benchmark West Texas Intermediate fell $1.82 to $40.80.

They have been aggressively buying put options, which would enable them to sell an oil contract at a profit if prices fall to a certain level, and they expect oil prices to come down as low as $30 per barrel.

U.S. gasoline futures (RBc1) fell even more than crude, tumbling 6 percent to a six-month low, despite stockpiles of the fuel falling 2.7 million barrels, compared with the 1.6 million-barrel drop expected by analysts in the Reuters poll.

Oil prices slipped further Tuesday, as concerns about weakening demand growth in China added to expectations that a global oversupply could last for years.

However, PIRA also said that Asian refinery margins would be slow to recover as the region remains oversupplied with oil products due to rising supplies from new refineries in the Middle East. Brent futures were at $48.61 a barrel, down 13 cents but still some way from their 2015-low of $45.19.

Canada increased exports to the United States by more than 400,000 barrels per day (bpd) over the past week to 3.39 million bpd, an Energy Aspects research note said. The draw was preceded by a 4.4 million decline for the week ending July 31, as crude production across the U.S. continues to level.

Vanguard Natural Resources, LLC (NASDAQ:VNR) share price decreased in the last trading session with a previous 52-week high of $27.22. Over the last four weeks, gasoline demand averaged 9.6 million barrels per day, up by 6.5% from the same period a year ago.