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Crude drops as supply report reveals U.S. is awash in crude

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Shutterstock photo - - Crude futures fell on Wednesday after data revealed U.S. inventories reach record highs last week, while soft U.S. economic growth rates also watered down oil prices /

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in June traded at $99.51 a barrel during U.S. trading, down 1.75%. New York-traded oil futures hit a session low of $99.38 a barrel and a high of $101.02 a barrel.

The June contract settled up 0.44% at $101.28 a barrel on Tuesday.

Nymex oil futures were likely to find support at $99.08 a barrel, the low from April 3, and resistance at $102.20 a barrel, Tuesday's high.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 1.7 million barrels in the week ended April 25, compared to expectations for an increase of 2.3 million barrels.

Total U.S. crude oil inventories stood at 399.4 million barrels as of last week, the highest level on record.

The report also showed that total motor gasoline inventories increased by 1.6 million barrels, confounding forecasts for a decline of 0.6 million barrels, while distillate stockpiles increased by 1.9 million barrels, compared to expectations for a gain of 0.6 million barrels.

Soft economic growth numbers out of the U.S. also bruised the commodity by stoking concerns the U.S. still battles headwinds as it navigates its way to recovery and may demand less fuel and energy than once anticipated.

The Bureau of Economic Analysis reported earlier that U.S. gross domestic product grew at an annual rate of 0.1% in the first quarter, far shy of expectations for a 1.2% growth rate. The U.S. economy expanded by 2.6% in the previous quarter.

While the headline growth rate was weak, many investors blamed rough winter weather, pointing out poor exports and investments affected by blizzards.

The data also revealed that consumer spending on services rose to its highest level in 14 years.

Overall consumer spending rose 3.0%, while spending on services rose by 4.4%, though still, concerns that the U.S. economy faces potholes, weather-related or not, sent investors ditching crude.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for June delivery were down 0.89%, trading at US$108.01 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$8.50 a barrel. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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