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Oil price is rising despite latest evidence of global glut!

The oil price rose on Wednesday and is now back above $35 a barrel, even despite another huge build in US crude stockpiles last week that suggests the global supply glut is only getting worse.

Latest data from the US Energy Information Administration revealed another 7.8 million barrels had been added to domestic reserves last week, said the Wall Street Journal. This was a far bigger gain than had been expected by analysts and boosted US stockpiles to 503 million barrels.

This is the biggest total recorded in the weekly data since records began in 1982, while in monthly data, which "don't line up exactly" with the weekly numbers, the 500 million barrel barrier has not been breached since 1930. The US – and the world – is still swimming in oil and production remains at least one million barrels a day above demand.

So why did the price of international benchmark Brent crude jump more than seven per cent and end two days of decline?

In relation to the data, it is refinery maintenance season in the US and so growth in reserves was expected, even if the actual number was on the high side. "Even though [the crude inventory build] was a shocking number, I think a lot of people… knew a big build was coming," said Phil Flynn, an analyst at Price Futures Group.
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