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Oil prices extend fall after surprise inventory build

Oil prices extend fall after surprise inventory build
FILE PHOTO: An employee holds a sample of crude oil at the Yarakta oilfield, owned by Irkutsk Oil Co, in the Irkutsk region, Russia on March 11, 2019. REUTERS/Vasily Fedosenko -
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Vasily Fedosenko(Reuters)
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TOKYO (Reuters) – Oil prices fell for a fourth day on Wednesday, extending losses after a surge in U.S. inventories surprised investors, overshadowing an interest rate cut by the Federal Reserve.

Brent crude futures <LCOc1> were down 6 cents at $60.55 a barrel by 0033 GMT, having fallen by 1.6% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures <CLc1> were down by 16 cents, 0.3%, at $54.90 a barrel, after declining 0.9%.

The Federal Reserve on Wednesday cut interest rates for a third time this year and signalled it plans no further cuts unless the economy takes a turn for the worse.

While a rate cut can often be bullish for oil prices because a stronger economy typically implies higher demand for crude, investors focused on soaring U.S. crude oil stockpiles amid higher imports and a release from national reserves.

“Oversupply concerns are dampening the optimistic outlook to the economy that the Fed painted,” said Edward Moya, senior market analyst at OANDA.

Crude inventories <USOILC=ECI> rose 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analysts’ expectations for a 494,000-barrel build. [EIA/S]

On Tuesday, the American Petroleum Institute, an industry group, had reported a 708,000-barrel decline in inventories, raising hopes that official figures would also show a drop.

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures <USOICC=ECI> rose for a fourth straight week, gaining 1.6 million barrels last week, the EIA said.

Still, gasoline and distillate inventories extended their declines even as refiners ramped up production, it said.

Gasoline stocks <USOILG=ECI> fell by 3 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.2 million-barrel drop. The fifth weekly drop brought stocks down to 220.1 million barrels, their lowest since Nov. 2017.

Distillate stockpiles <USOILD=ECI>, which include diesel and heating oil, declined for a sixth week in a row, falling 1 million barrels last week, versus expectations for a 2.4 million-barrel drop, the EIA data showed.

(Reporting by Aaron Sheldrick; editing by Richard Pullin)

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