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US Crude Enters a Bear Market As Domestic Supplies Soar

Summary:
Crude oil futures are extending their losses midweek as the energy commodity once again slipped into a bear market. This comes as the US government reported a bigger-than-expected increase in domestic inventories. Surprisingly, despite the steep losses over the last month, crude prices are still in positive territory on the year. July West Texas Intermediate (WTI) crude oil futures tumbled .78, or 3.33%, to .70 per barrel at 19:13 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are down 12.5% in the last five trading sessions and 17% in the last month. Year-to-date, oil has advanced 13%. Brent, the international benchmark for oil prices, is trading relatively flat compared to its American counterpart. August Brent crude futures dipped %excerpt%.08, or 0.13%, to .55

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Crude oil futures are extending their losses midweek as the energy commodity once again slipped into a bear market. This comes as the US government reported a bigger-than-expected increase in domestic inventories. Surprisingly, despite the steep losses over the last month, crude prices are still in positive territory on the year.

July West Texas Intermediate (WTI) crude oil futures tumbled $1.78, or 3.33%, to $51.70 per barrel at 19:13 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are down 12.5% in the last five trading sessions and 17% in the last month. Year-to-date, oil has advanced 13%.

Brent, the international benchmark for oil prices, is trading relatively flat compared to its American counterpart. August Brent crude futures dipped $0.08, or 0.13%, to $60.55 a barrel on London’s ICE Futures exchange. However, like WTI futures, Brent prices are down 11% this week and 15% this month, but they are up 12% on the year.

According to the US Energy Information Administration (EIA), domestic crude inventories surged by 6.8 million barrels for the week ending May 31. This is a lot higher than the market forecast of 1.7 million barrels. Gasoline stockpiles jumped 3.4 million barrels, while distillate supplies edged up 4.6 million barrels.

The US Baker Hughes total oil rig count clocked in at 800, up from 797 in the previous week.

In addition to US crude stockpiles climbing to their highest levels in about two years, fears of a global economic slowdown have contributed to oil entering a bear market. US private sector job creation was weaker-than-expected in May with private payrolls up just 27,000, which is a nine-year low.

Should the global economy decelerate and cool down, then it could impact demand. If economies are not growing, then their need for oil would dissipate.

Markets are paying close attention to reports ahead of the next Organization of the Petroleum Exporting Countries (OPEC) meeting on June 25–26. Early reports indicate that the meeting could be delayed by a month at the request of Russia. This is key because the cartel and its allies’ production freeze deal expires at the end of June. For now, Saudi Arabia Energy Minister Khalid al-Falih has hinted that OPEC may employ measures to stabilize prices, which could entail extending the current deal for another few months.

We have previously stated our commitment to do whatever it takes to stabilize markets and we have delivered on those promises. And I am making that commitment again.

In other energy markets, July natural gas futures plunged $0.06, or 2.4%, to $2.35 per million British thermal units (btu). July gasoline futures slid $0.035, or 2.00%, to $1.69 a gallon. July heating oil futures plummeted $0.05, or 2.7%, to $1.77 a gallon.

If you have any questions and comments on the commodities today, use the form below to reply.


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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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