Oil Slumps Below $80 Amid Surging US Stockpiles
by Bloomberg | Julia Fanzeres and Jordan Fitzgerald
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil extended its recent skid as US crude inventories swelled to the highest since June the Federal Reserve signaled fresh concerns about inflation.
West Texas Intermediate settled at $79 a barrel, the lowest closing price since mid-March. Prices also broke beneath the 200-day moving average, which had served as a support level for more than a month.
A report from the Energy Information Administration showed US crude stockpiles increased 7.27 million barrels last week, the biggest jump since early February and more than the 4.91 million-barrel gain projected by an industry group on Tuesday. That adds to headwinds that also include the prospect of a cease-fire that would reduce tensions in the Middle East. Crude last month surged to the highest since October following Iran’s unprecedented attack on Israel.
“The surprise build from the EIA caught most traders off guard,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. When combined with elevated interest rates from the Fed and accelerated liquidation after crude broke through moving averages, “the long side of crude is losing its luster.”
While OPEC+ supply curbs are also supporting prices, uncertainty over US monetary policy and softness in fuel markets including diesel are adding to headwinds. US inflation remains too hot, so rates will remain elevated, Federal Reserve Chair Jerome Powell said Wednesday. Though Powell said the Fed’s next move won’t likely be a hike, the uncertainty surrounding when inflation — and subsequently rates — will come down adds more bearish pressure to markets.
Wednesday also marks the Labor Day holiday in many countries, meaning trading volumes were thinner than usual.
Prices:
- WTI for June fell 3.6% to settle at $79 a barrel in New York.
- Brent for July settlement dropped 3.3% to $83.44 a barrel.
by Bloomberg | Julia Fanzeres and Jordan Fitzgerald
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas