Paring off more than $2 from yesterday's spot price, crude oil futures headed back below $77 on the New York Mercantile Exchange today as bloated domestic crude inventories and a pressured financial market staved off investors' purchasing enthusiasm for the energy commodity.
The price of light, sweet crude oil for January delivery tumbled more than 2% during today's trading on the NYMEX, closing at a final price tag of $76.60 a barrel.
Likewise, natural gas spot prices at the Henry Hub skidded farther into negative territory primarily due to milder winter weather, which has advanced the drive up in supply levels. The price of natural gas ultimately settled 23 cents lower to $4.530 per thousand cubic feet on Wednesday, only days after surpassing the $5-threshold.
Also putting pressure back onto dollar-denominated commodities, the greenback strengthened against the euro today as Wall Street's financial indexes lost their upward momentum, spurring traders to seek safe-haven once more in the U.S. currency.
Gasoline Stocks Sucker Punch Energy Prices
Today, the U.S. Energy Information Administration released its weekly inventory report, which indicated that gasoline stocks rose more than anticipated due to slackened gasoline demand. Consequently, gasoline prices traded lower, along with heating oil futures, despite a larger-than-expected draw in distillate stocks by 1.2 million barrels.
According to the EIA's data, domestic gasoline supplies increased by 4 million barrels to 214.1 million barrels against a forecasted increase of only 1 million barrels, and still higher than the American Petroleum Institute's estimated increase of 3.4 million barrels.
"The DOE report for crude inventories was very bearish for gasoline, which rose a lot more than forecast," said Bill O'Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC. "Gasoline prices really took a beating today and took crude oil down with it."
Additionally, the EIA reported that the domestic refinery utilization rate dropped by a 0.6 percentage point to 79.7% of capacity, more than an earlier forecast of a 0.4 percentage point.
"What's unusual about what we're seeing now is that inventories are currently at levels that you typically see in early January, so we're running about a month faster than average," the analyst observed. "Demand is still below last year, and still well below trend, so refiners are running at such low levels in an attempt to get some of the supply overhang in the product market worked off -- it's just not happening in part because prices are still too high," O'Grady contended.
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