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Oil stockpiles continue to build: Govt.

The U.S. is awash in crude oil, and the storage tanks keep filling up.

Despite falling prices, U.S. oil producers continue to pump faster than market demand. That has created a glut of oil in U.S. refineries, underground tanks, pipelines and oil tankers in transit. This month, the Department of Energy began reporting just where those surpluses are growing most rapidly.

The biggest buildup is happening in the East and Midwest, where roughly three-quarters of the available storage capacity is full. The Midwest includes the industry's major storage and transfer hub in Cushing, Oklahoma. Midwest refiners had filled some 80 percent of storage capacity in March, the latest data available, which is the highest rate recorded by the Energy Department's EIA since it started collecting storage data.


Crude is also backing in pipelines and oil tankers on its way from oilfields to refineries. The backlog in the Midwest stood at 35 million barrels in March, up from 25 million barrels in March 2011. The increase is mainly the result of increased pipeline capacity and a dramatic increase the volume of oil shipments by rail.

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The buildup of U.S. crude stockpiles comes as producers around the world continue to compete for market share while demand remains weak.

As crude surpluses have moved higher, prices have fallen. And as long as there's a glut of oil looking for a buyer, oil prices will remain under pressure.

Oil prices fell nearly 2 percent on Monday amid further signs of a slump demand from Chinese and worries that the OPEC cartel will continue to pump as fast as its members can produce.

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Government data from China, the top net oil importer in the world, showed it cut oil purchases in May by about a quarter compared to purchases in April, as refineries there drew from crude stockpiles.

U.S. crude prices Monday fell a dollar to about $58 a barrel.