Oil slumps 3% after US inventory surge

Oil futures slumped 3% in American trade away from four-year highs, after earlier data showed US inventories surged past forecasts last week. 

As of 05:30 GMT, US crude futures due in November fell 2.64% to $71.24 a barrel, while Brent December futures shed 2.76% to $80.80 a barrel, as the dollar index declined 0.39% to 95.14. 

US Inventory Build 

The Energy Information Administration released its report on US crude stocks, showing a build of 6 million barrels in the week ending October 5, adding to the 8 million build in the previous reading, with total stocks increasing to 410 million barrels, settling at five-year averages. 

Total gasoline stocks rose 1 million barrels, making them 7% above averages, while distillate stocks fell 2.7 million barrels, marking them 4% below averages. 

Otherwise, the Energy Information Administration cut its forecasts for global oil demand growth by 60 thousand bpd to 1.52 million bpd in 2018, while expecting growth to speed up to 20 thousand bpd in 2019. 

Oil prices are up 20% so far this year as OPEC and Russia carry on their agreement to cut global output to easy a previous supply glut, while the US withdrew from the Iran deal and sanctioned their oil exports.

US Oil Rig Count 

Baker Hughes, a US oil services company, reported a drop of two rigs in the oil rig count to a total of 863 rigs, the third weekly increase in a row. .

US output has recently risen to the second highest in the globe, taking the place of Saudi Arabia while Russia continues at the top with 11.21 million bpd. 

US Inflation, Labor Data 

Other US data showed consumer prices rose 0.1%, slowing down from 0.2%, while core prices rose 0.1%, also missing estimates of 0.2%. 

On a yearly basis, consumer prices rose 2.3%, slowing down from 2.7%, while core prices rose 2.2%, below expectations of 2.3%. 

Unemployment claims rose 7 thousand in the week ending October 6 to 214 thousand, while continuing claims rose 4K in the week ending September 29 to 1.660 million.