Investing.com - Oil prices extended a sharp decline on Wednesday after an unexpected build in U.S. stockpiles, its first in eight weeks, added selling pressure to concerns over a global slowdown.
The Energy Information Administration said in its regular weekly report that crude oil inventories increased by 2.39 million barrels in the week to August 2.
That was compared to forecasts for a stockpile draw of 2.85 million barrels, after a decline of 8.5 million barrels in the previous week.
The EIA report also showed that gasoline inventories unexpectedly surged by 4.44 million barrels, compared to expectations for a draw of 0.72 million barrels, while distillate stockpiles increased by 1.53 million barrels, compared to forecasts for a gain of 0.48 million.
Oil prices extended already sharp declines after the report with U.S. crude prices slumping 3.8% to $51.62 a barrel by 10:42 AM ET (14:42 GMT), compared to $52.42 prior to the publication.
London-traded Brent crude futures sank 3.2% to $57.03 a barrel, compared to $57.62 ahead of the release.
Oil had already been diving ahead of the release amid a generalized flight to safety and selloff of risk assets.
U.S. 30-year yields fell towards record lows while U.S. equities sold off as concerns about the impact of the escalating Sino-U.S. trade war on global economic growth and as policymakers worldwide attempt to provide support.
Central banks in New Zealand, India and Thailand all cut interest rates by a wider-than-expected margin as they struggle to offset a global slowdown that runs the risk of further denting demand for oil.
In a series of tweets, U.S. President Donald Trump suggested that the Federal Reserve needed to follow the example of other central banks and “cut rates bigger and faster”.
He also said that “our problem is not China”, giving the impression that the ongoing trade dispute with Beijing was anything but close to resolution.