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Crude hammered as US stockpiles soar; WTI settles under $97

A gas flare is seen at an oil well near Williston, North Dakota.
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U.S. oil prices tumbled on Wednesday, extending one of the year's sharpest sell-offs, after government data showed a surprisingly large increase in crude supplies.

Including Wednesday's decline, the market has dropped more than 5 percent in five sessions pulling U.S. crude below $97 a barrel for the first time since July. But European Brent crude fell even more, narrowing the heavily-traded Brent-WTI spread, which had gapped to more than $13, the widest in six months.

Total U.S. oil inventories rose more than 5 million barrels in the week to Oct. 18, near double market estimates, while stockpiles at Cushing, Oklahoma, grew for the second time in as many weeks, government data showed. Refinery run rates have dropped by some 6.6 percent in the last six weeks due to seasonal maintenance, curbing crude demand for the moment.

Brent crude slid by nearly $2 to near $108. U.S. crude settled down $1.44 at $96.86, its lowest close since July 1.

Despite the declines, the Brent-WTI spread narrowed for the first time in four sessions, suggesting that the $3.50 move that pushed Brent's premium over U.S. crude to more than $13 a barrel for the first time since April had been exaggerated. The spread was last trading at $11.41, 26 cents narrower than Tuesday's settlement.

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