Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
[Gillian Rich, Investor’s Business Daily]
Oil futures fell hard Wednesday toward 2017 lows as the Energy Department reported a surprise jump in U.S. crude stockpiles.
The Energy Information Administration said U.S. stockpiles jumped by 3.3 million barrels last week. Analysts expected a 3.5 million barrel decline in inventories. Gasoline inventories increased by 3.3 million barrels. Late Tuesday, the American Petroleum Institute, an industry group, reported a 4.6 million barrel drop, but gasoline inventories rose by 4.1 million barrels.
Domestic production fell to 8.318 million barrels per day from 9.34 million barrels per day in the prior week.
Brent futures tumbled 3.6% to $48.31 per barrel, as the global benchmark continued to fall further below $50. U.S. crude plunged 4.4% to $46.08 per barrel.
Shares of Exxon Mobil (XOM) fell 0.5% to 80.77 on the stock market today. Chevron (CVX) was off 1%. Both Exxon Mobil and Chevron are members of the Dow Jones industrial average.
BP (BP) shares tumbled 1.9%. Royal Dutch Shell (RDSA) fell 1.1%. BP and Royal Dutch Shell have been forming bases, but pulling back in recent days, approaching their 50-day lines.
In its monthly short-term energy outlook Tuesday, the EIA said U.S. oil output average 10 million barrels per day in 2018 up from 9.3 million barrels per day currently.
But analysts believe production could hit the key mark this year. Phil Flynn, a senior market analyst at the Price Futures Group, said earlier this year that U.S. production could reach 10 million barrels per day in August.
The EIA also said it sees OPEC oil production averaging 32.3 million barrels per day this year and 32.8 million barrels per day in 2018.
But the growing tension between Qatar and other OPEC members could undermine the OPEC deal. De facto OPEC leader Saudi Arabia and the United Arab Emirates have cut diplomatic ties with Doha.
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