U.S. crude futures fell sharply after the U.S. government reported an unexpected rise in crude and gas inventories. Fred Katayama reports
Crude prices dropped sharply Wednesday, taking some oil stocks with them. Sparking the fall: an unexpected spike in U.S. inventories of crude and gasoline. Crude stocks grew by 3.3 million barrels instead of dropping, as analysts had expected. RegentAtlantic research director Andy Kapyrin sees a balanced oil market despite today's inventory increase. SOUNDBITE: ANDY KAPYRIN, DIRECTOR OF RESEARCH, REGENTATLANTIC: "Oil can maintain its current equilibrium. I think the market is more balanced than it was in 2015, 2016. And a lot of that has to do with the special deal Russia did with OPEC late last year which has continued into this year. Both have meaningfully cut oil production." But some analysts worry that rivalries between OPEC members could weaken the agreement to cut output. On Monday, Saudi Arabia and the UAE cut diplomatic ties with Qatar. Energy shares were the biggest drag on the S&P 500 Wednesday. Drillers like Transocean and Diamond Offshore got hit harder than integrated oil giants ExxonMobil and Chevron.