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Oil hits nearly 6-1/2 year low after stockpile build

US oil prices hit their lowest in almost six and a half years on Wednesday after US data showed an unexpected rise in crude stockpiles.

US crude stocks were up 2.6 million barrels at 456.21 million barrels last week, the US Energy Information Association (EIA) said. Stocks at Cushing, Oklahoma, the delivery point for US crude futures, rose 326,000 barrels to 57.44 million.

This was in sharp contrast to a Reuters poll, which forecast a 777,000-barrel inventory decrease.

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“The numbers were a total surprise with crude showing a build when the whole (market) was forecasting a draw,” Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York, said.

“We feel these numbers are not factored in to the current price of spot crude.”

US crude oil futures, also known as West Texas Intermediate (WTI), fell USD 1.75 to USD 40.87 by 11:54 a.m. EDT (1554 GMT). The contract earlier fell to USD 40.74, the lowest level since March 3, 2009, when WTI touched USD 39.44. The front month, September, US contract expires on Thursday.

North Sea Brent crude was down USD 1.48 at USD 47.33 a barrel after dipping below USD 47.

US crude imports also rose last week by 465,000 barrels per day.

Meanwhile, gasoline stocks fell by 2.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.6 million barrels drop.

Prices had steadied earlier on Wednesday after a six-week rout driven by global oversupply and concerns about falling demand in Asian economies and the United States.

US oil production is at record levels and producer costs appear to be declining, with no output scale-back anticipated.

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US production, which declined slightly two weeks ago, remains steady in week of Aug. 14 at 9.348 million barrels a day, versus 9.395 million barrels the week earlier.

Bearish sentiment was exacerbated last week when repairs at a large refinery in Whiting, Indiana caused a large stock build at Cushing.

Oil has lost about a third of its value since June and prices have been hovering just above six-year lows for the past week. The downward trend has been driven by global oversupply and record stockpile levels, analysts say.

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