(Bloomberg) -- Oil extended its decline from the highest level since 2014 -- following a decline in U.S. stocks -- after a surprise gain in American crude stockpiles and a larger than expected increase in gasoline supplies.
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Futures in New York fell more than 2% in early Asian trading to below $84 a barrel. Crude inventories rose for the first time in eight weeks, while gasoline stockpiles expanded by more than double the median forecast in a Bloomberg survey, according to government data. The White House also said it can work to accelerate the release of strategic oil reserves after prices rallied.
While oil is extending its drop for a second session, the market is showing signs of significant tightening on robust demand and supply outages. Buyers in Asia are paying higher premiums for cargoes and Morgan Stanley has joined Goldman Sachs Group Inc. in forecasting $100 crude in the third quarter.
"We've been seeing some good gains this week, it's not surprising we are seeing a bit of a pullback," said Daniel Hynes, senior commodities strategist for Australia & New Zealand Banking Group Ltd. "The outlook is still pretty bright, however, nothing has fundamentally changed."
Oil's rally, however, poses a challenge to consuming nations and central banks as they try and stave off inflation while supporting economic growth. The Biden administration this week renewed its pledge to tackle higher prices.
U.S. crude stockpiles expanded by 515,000 barrels last week, according to the Energy Information Administration. Gasoline inventories rose by 5.87 million barrels, compared with a 2.6-million barrel gain forecast in the survey.
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