Bad news from the weekly report on U.S. crude oil inventories today from the Energy Information Administration. But surprisingly oil and energy stocks rallied in the middle of the day with West Texas Intermediate bouncing back to $51.66 a barrel, down 2.4%, and energy stocks cutting their loss to 0.7% after being lower by 2% this morning.
U.S. commercial crude inventories climbed 4.9 million barrels in the week ended on February 6 from the prior week. That took U.S. crude inventories to 417.9 million barrels. That’s the highest level of inventories at this time of year in the last 80 years of data
Oil is down today on a new forecast by the International Energy Agency that has increased projected supply for the first half of 2015. Oil stockpiles in members of the Organization for Economic Cooperation and Development could well approach a record 2.83 billion barrels by mid-2015
Iraqi oil production breaks 35-year record sending crude down by more than 2%. Regulators in China limit margin lending and the bubble shrinks in Shanghai
With commodity bulls in retreat today as traders decide that the sell off isn’t over and liquidate their long positions, the price of West Texas Intermediate, the U.S. crude benchmark, has tumbled to $63.35 for January delivery. That’s a drop of $2.39 a barrel or 3.63% on the day as of 2 p.m. The Brent benchmark is down to $66.43 a barrel, a drop of $2.64 or 3.82%.
The problem over the last six weeks has been forecasts that show slipping demand and rising production. Today’s news out of China—showing that although exports climbed, imports (including crude) fell—has just added to fears
So why haven’t oil markets panicked on the most recent news from Iraq? After all most projections of global oil demand and supply over the next decade count on Iraq’s oil industry to provide about 60% of OPEC’s (Organization of Petroleum Exporting Countries) increases in production during that period.
The news on Iran has led to selling of Japanese yen, oil, and gold as investors and traders have decided that the world isn’t as risky a place as it was just a few days ago. The Japanese yen, the world’s favorite safe haven currency, fell 0.45% against the dollar to 101.71. West Texas Intermediate fell 0.89% to $94 a barrel and gold declined 0.17% to $1242 an ounce.
U.S. stocks fell in the last hour of New York trading after Secretary of State John Kerry raised the odds for armed U.S. intervention in Syria. With U.S. allies and other countries expressing the need to punish the government of Syrian President Bashar Al-Assad for what looks like the use of chemical weapons on August 21 in the Damascus suburb of Ghouta, markets closed modestly lower.
