Crude Oil Price Falls on Huge Inventory Increase

Oil Slips Govt’s Hope For Market Correction Rises

Crude Oil Price Falls on Huge Inventory Increase

"However, now that we are getting closer to $100/bbl the net impact of higher oil prices is again becoming a net negative", UBS economists said in a research note.

"This discussion about possible OPEC supply increases after the June meeting has put a brake on the oil price for the time being, so $80 is a big hurdle to overcome", Commerzbank strategist Carsten Fritsch said.

The sudden consideration comes in response to rising oil prices that are pushing toward three-year highs and are beginning to drag on consumers. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014, U.S. West Texas Intermediate (WTI) crude futures eased 0.4 percent, to $71.95 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014, Reuters reported.

"The reality of the world price of crude oil is that we can produce as much as we want here, but as long as it's a globally traded commodity, we are going to feel it here", said Kevin Book, managing director at the research and analysis firm Clearview Energy Partners LLC in Washington.

Venezuela's output has fallen to about 1.4 million barrels per day, according to Opec secondary sources, as its economic crisis grows and state-run PDVSA struggles to pay debts and fund operations.

Despite record high US crude production, the Organization of Petroleum Exporting Countries has succeeded in clearing the glut, according to the International Energy Agency.

Brent oil has averaged $69.37 a barrel since January.

Silver continues to defy market's trend as the price continues to remain constant at $16 seeing only minor change across the day despite U.S. dollar gaining strength.

The benchmarks are diverging as rising inventories in the USA weigh on American futures while risks to supply from Iran to Venezuela buoy Brent. Russia and the Organization of Petroleum Exporting Countries will discuss whether it's appropriate to scale back output cuts, Russian Energy Minister Alexander Novak said in St. Petersburg, adding that Russia and Saudi Arabia agree market conditions will dictate any decision. The latter is somewhat surprising, Flynn said, because Brent crude is trading at more than a $7 premium to USA crude, making exports more attractive.

Dudley said he saw oil prices falling to between $50 and $65 because of surging shale output and OPEC's capacity to boost production to cover a potential shortfall in Iranian supplies owing to US sanctions.

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