U.S. crude prices fell more than 5 percent on Wednesday to its lowest point in more than two months amid a new report of surging crude inventories.
The Energy Department said U.S. oil inventories increased by 8.2 million barrels in the most recent recorded week. West Texas Intermediate dropped $2.86 on Wednesday to $50.28 a barrel on the New York Mercantile Exchange.
In an interview with the Houston Chronicle, Total Chairman and CEO Patrick Pouyanne said inventories will continue to grow as long as the world’s oil producers put out more crude than markets absorb.
“At the end of the year, there was still supply over demand by something like 400,000 to 500,000 barrels a day,” Pouyanne said in a conversation on the sidelines of the energy conference IHS CERAWeek. “That must be eliminated before inventories decline.”
He said he believes Saudi Arabia and the other 23 countries that struck a deal to cut production through June will have to keep the cuts in place through the end of the year to have a significant impact on the market.