On Thursday, oil prices went down 2 percent. The drop occurred as the market revealed increasing amounts oil products, including gasoline. This growth has carried petroleum supplies to record-breaking highs.
During the previous session, Brent and U.S. crude futures grew by no less than 1 percent. This increase came just after the Energy Information Administration (EIA) announced that inventories of crude had fallen 2.3 million barrels last week. Compare this to the original prediction of a 2.1 million barrel drop.
Regardless, crude inventories in the U.S. are at an all-time high of 519.5 million barrels for this time period, said the EIA. In addition to this, U.S. crude and oil product stocks soared to a historical high of 2.08 billion barrels as gasoline recorded a growth of 911,000 barrels during the summer’s busy driving season.
On top of all of that, traders reported that Genscape, a market intelligence company, posted a growth of 725,176 barrels for the week of July 19 at the Cushing, Oklahoma delivery location.
“The market is technically weak,” said Liquidity Energy broker, Pete Donovan, “inventories are still high for summer, maintenance season is not far off and we have floating barrels at sea to top it all.” Liquidity Energy is based in New York.
Brent closed 2.1 percent lower at $46.20 per barrel, at a drop of 97 cents.
West Texas Intermediate (WTI) crude closed 2.2 percent lower at $44.75, at a drop of $1.
Hans van Cleef, senior energy economist with ABN AMRO stated that Brent could drop down near the $42-$43 mark, “Near-term, there are still downside risks,” he said.
Trader at California’s PSW Investments, Phil Davis referred to the 4.2 million-barrel build of “the oils” mentioned by EIA, which surpassed the build of gasoline.
Davis said these other oils include specialty gas for smaller planes and lesser-known industrial oils, the kind refiners usually create when there is an overabundance of gasoline. “These other oils don’t get as much attention as the headline numbers put out by the EIA and have been a clever and convenient way to hide weak product demand,” Davis was also quoted as saying.
According to a source, exports of Qua Iboe, Nigeria’s biggest crude stream, will continue to stay under force majeure. This will last at least a month as Exxon Mobil repairs a pipeline.
Article written by HEI contributor Briana Steptoe.