Crude Oil Moves Lower After Showing Unexpected Increase By Inventories

(RTTNews) - Crude oil futures moved sharply higher in overnight trading but came under pressure over the course of the trading day on Wednesday.

After surging to a higher of $64.19 a barrel, crude for July delivery slid $0.46 to 0.7 percent to end U.S. trading at $61.57 a barrel.

The downturn by the price of crude oil came after a report released by the Energy Information Administration showed crude oil inventories in the U.S. unexpectedly increased in the week ended May 16th.

The EIA said crude oil inventories rose by 1.3 million barrels last week after jumping by 3.5 million barrels in the previous week. Economists had expected crude oil inventories to fall by 1.9 million barrels.

Nonetheless, crude oil inventories remain about 6 percent below the five-year average for this time of year, the report said.

The report said gasoline inventories also edged up by 0.8 million barrels last week but remain about 2 percent below the five-year average for this time of year.

Distillate fuel inventories, which include heating oil and diesel, also crept up by 0.6 million barrels last week but are about 16 percent below the five-year average for this time of year, the EIA said.

In overnight trading, crude oil futures surged amid fears that escalating geopolitical tensions may put supply at risk in the key Middle East producing region.

Middle East supply fears returned to the fore after reports emerged that Israel is preparing a strike on Iranian nuclear facilities, a development that might disrupt oil supplies.

Citing U.S. officials, CNN reported that Israel may be in the process of preparing a strike on Iranian nuclear sites. However, the final decision by Israeli leaders remains unknown.