Oil Prices Plunge
West Texas Intermediate (WTI) crude oil shed nearly six percent Thursday while the Brent benchmark lost more than four percent.
July WTI futures lost $3.51 Thursday, settling at $57.91 per barrel. The benchmark peaked at $61.41 and bottomed out at $57.33.
Brent crude oil for July delivery ended the day at $67.76 per barrel, representing a $3.23 decline.
“The drop in oil prices yesterday continued into today, bringing levels not seen since mid-March and leading to a one-day decline not seen since the Christmas Eve debacle” when the WTI lost 6.7 percent, noted Tom Seng, Assistant Professor of Energy Business with the University of Tulsa’s Collins College of Business. “Today, both Brent and WTI fell below critical price support levels of $70 and $60 per barrel, respectively.”
Seng noted that the unexpected build reported in Wednesday’s U.S. oil inventory report fueled market oversupply concerns. Meanwhile, global economic concerns exacerbated bearish sentiment, he added.
“U.S. commercial inventories are now at the highest level since July 2017,” Seng said, pointing out that current levels exclude Strategic Petroleum Reserve stocks. “Both gasoline and distillates inventories rose last week, a major change from past reports.”
Mario de la Ossa, energy specialist with Orbital Insight, told Rigzone that oil stocks worldwide have been moving upward as well.
“Global inventory builds continue while the market wrestles with geopolitical tension offset by U.S./China trade issues,” said de la Ossa. “Missing in the broader mix is full consideration of overall global inventory trends.”
In addition, de la Ossa offered his firm’s perspective on the outcome of the next OPEC meeting late next month.
“We see the OPEC cuts in the context of record high global inventories as necessary to prevent lower prices rather than a notably bullish catalyst and expect the June meeting to result in an extension of the cuts,” he said.
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