U.S. crude hits three-month low again on reported Cushing build

Oil prices fell again on Thursday, with U.S. crude hitting three-month lows after a fresh stock build at the delivery hub for U.S. crude futures added to concerns that producers were pumping more than needed.

Surplus barrels of gasoline have already made the glut developing across oil this year more worrisome to some than the crude oversupply of the past two years that had halved prices. U.S. Gulf Coast gasoline stocks hit record highs last week for a July month, while East Coast inventories reached all-time peaks, government data showed on Wednesday. [EIA/S]

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Market intelligence firm Genscape added to the bearish sentiment on Thursday, reporting a build of nearly 328,000 barrels at the Cushing, Oklahoma delivery hub for U.S. crude futures, traders who saw the data told Reuters.

U.S. crude’s West Texas Intermediate (WTI) futures fell 52 cents, or 1.3 percent, to $41.40 a barrel by 11:19 a.m. EDT (1519 GMT).

WTI earlier fell to $41.29, its lowest since April 20. Brent crude futures LCOc1 were down 53 cents, or 1.2 percent, at $42.94, after falling earlier to $42.81, the lowest since April 20.

Oil prices are still up about 60 percent from 12-year lows of $26-$27 in the first quarter. But the rally has faded since they breached $50 in May.”Our price target right now is $38 for WTI,” said Matthew Tuttle, chief executive of Tuttle Tactical Management in Riverside, Connecticut. “We think there’s more to go on the downside because the move that we saw up to $50 was fundamentally-driven but that created more supply.”

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Oil companies have also reported lower earnings lately, hit by refining margins.

Energy major Royal Dutch Shell (RDSa.L) reported a more than 70 percent fall in quarterly profit on Thursday, well below analysts’ estimates. Shell’s net income came in at $1 billion in the second quarter, also beneath expectations.

Some have a slightly more optimistic view on oil.

Analysts at Goldman Sachs said their forward assessment of the supply-and-demand balance in oil leads them to expect that oil prices will remain in a $45-$50 range through mid-2017.

“It is important to emphasize that while timespreads weakened as oil prices declined last month, the recent move lower in oil prices has occurred alongside relatively stable timespreads,” Goldman’s analysts said in a note.

(Additional reporting by Christopher Johnson in LONDON; Editing by William Hardy and Marguerita Choy)

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