WTI September crude oil futures closed Wednesday (August 7) down $1.32, or 2.46%, to $52.31 a barrel. U.S. oil plunged more than 5% to a seven-month low, continuing the recent slump, following an unexpected increase in U.S. crude oil inventories and fears that the escalation of Sino-U.S. trade problems will lead to shrinking demand.
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EIA data bearish pressure on oil prices
Oil prices fell earlier on trade concerns and then continued to fall as U.S. government data showed that U.S. crude oil inventories increased by 2.4 million barrels last week, with analysts expecting a 2.8 million barrel reduction.
The U.S. Energy Information Agency (EIA) said U.S. crude oil inventories had fallen for seven consecutive weeks before last week’s increase, but were still about 2% higher than the five-year average; U.S. gasoline inventories increased by 4.4 million barrels and distillate oil by 1.5 million barrels last week, both of which hit record levels in the Gulf Coast region in the same period in history.
John Kilduff, partner of Again Capital LLC in New York, said that after seven consecutive weeks of falling oil prices, some people believed that today’s EIA inventory report would reverse the trend of oil prices, but supporters of this view were squeezed out of the market.
Andy Lipow, president of Lipow Oil Associates, said the data disappointed the market and increased inventories of crude oil and refined oil. As refineries increased productivity utilization, the United States entered the final sprint of the driving season, and the supply of refined oil was more than enough.
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Since last week, oil distribution has fallen by nearly 14% as global stock markets tumbled.
Gene McGillian, vice president of market research at Tradition Energy, said the market continued to decline because of concerns about demand growth and the belief that economic growth might be affected by trade conditions; the market was only concerned about demand trends for the rest of the year.
Josh Graves, senior market strategist at RJO Futures, said that unless bearish sentiment changes, U.S. oil could fall to a low of about $40 a barrel, but U.S. oil production is still soaring, and stock markets hint at heightened concerns about the economic downturn. Graves points out that we can continue to follow this trend. Crude oil stocks are disappointing and the stock market is in a worrying range.
Iran has seized several oil tankers in the Strait of Hormuz in recent weeks, and tensions remain in the Middle East; the Strait is a fortress for oil transport; Saudi Energy Minister Falkh and U.S. Energy Minister Perry expressed common concern Tuesday about the threat to free maritime transport in the Gulf region.
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