Thursday, March 24, 2016
New York (CNNMoney) — Don't be fooled by the recent spike in oil prices. The world continues to drown in excess supply.
U.S. oil stockpiles skyrocketed by 9.4 million barrels last week to 532.5 million barrels, according to figures released on Wednesday by the U.S. Energy Information Administration (EIA). That's roughly triple what analysts had been bracing for and adds to "historically high" inventory levels.
It's evidence of a deepening supply glut despite the recent rise in oil prices which would signal the opposite. Last week crude climbed above $40 a barrel for the first time since early December amid hopes that global producers will freeze their production at current levels. There have also been signs that U.S. output is gradually declining.
However, the latest EIA report shows that inventories continue to pile up in the mean time.
"We are oversupplied. This price rally feels a little bit premature," said Anthony Starkey, energy analysis manager at analytics firm Bentek Energy.
Oil prices retreated 3 percent on Wednesday (March 23) to around $40.20 a barrel, dragging down shares of energy stocks like Chevron and ConocoPhillips.
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