Crude Oil Prices Slide With Supply Surplus And Poor Economic News

Crude oil prices hit their lowest point in 18 months on 21 June with WTI settling at $78.20/B and Brent dropping to $89.23/B. Poor economic prospects based on a strengthening dollar and weak economic indicators for the US, Europe and China led some traders to comment that a further drop in prices can be expected. Rising crude inventories in the US and a steady surplus in supply from Saudi Arabia and other Gulf producers also put downward pressure on prices, which some see as respite for a global economy that continues to struggle with recovery.

In its Weekly Petroleum Status Report , released on 20 June, the US Energy Information Administration (EIA) said US commercial crude oil inventories increased by 2.9mn barrels during the week ending 15 June. At 387.3mn barrels, US crude oil inventories area above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.9mn barrels and are at the lower limit of the average range. Distillate fuel inventories increased by 1.2mn barrels and are at the lower limit of the average range for this time of year. Total commercial petroleum inventories increased by 11.1mn barrels.

US crude oil imports averaged 9.4mn b/d, up by 328,000 b/d from the previous week. Over the last four weeks, crude oil imports have averaged 9.1mn b/d, 168,000 b/d above the same four-week period last year. US crude oil refinery inputs averaged 15.6mn b/d during the week, 12,000 b/d below the previous week�s average. Total products supplied over the last four-week period have averaged 18.6mn b/d, down by 2.2% compared to the similar period last year.

Settlement Prices For Benchmark Crudes ($/B)

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