Crude Futures Drop Amid Weak Demand and Abundant Supplies

The latest U.S. petroleum data has shown continued weak demand and abundant supplies, leading to a decline in crude futures prices. On Wednesday, light, sweet crude for August delivery settled 58 cents, or 0.8%, lower at $69.31 a barrel on the New York Mercantile Exchange. This comes despite a larger-than-expected decline in crude-oil stockpiles, which still remain 18.3% higher than a year ago. Energy experts attribute the drop in prices to swelling inventories of gasoline and distillates, as well as continued weak demand.

Key Takeaways:

• Crude futures prices dropped 0.8% to $69.31 a barrel on the New York Mercantile Exchange, with Brent crude settling down 0.7% at $68.79 a barrel.
• The U.S. Energy Information Administration reported a larger-than-expected decline in crude-oil stockpiles, but inventories remain 18.3% higher than a year ago.
• Energy experts attribute the drop in prices to swelling inventories of gasoline and distillates, as well as continued weak demand.
• Total U.S. oil demand is down 5.8% on year, while consumption of distillates is down by 9.4% due to lower industrial activity.
• Oil refiners are facing pressure on their margins due to rising crude prices and continued weak demand, which could force them to rein in processing rates.

Statistics:

• Crude futures prices have more than doubled since hitting their February nadir.
• Crude inventories are 18.3% higher than a year ago.
• Total U.S. oil demand is down 5.8% on year.
• Consumption of distillates is down by 9.4% due to lower industrial activity.
• Partially finished fuel stocks at refineries rose 355,000 barrels during the week.

Sources:

• Dow Jones Commodities News via Comtex
• Dow Jones Newswires
• Ritterbusch and Associates
• Tradition Energy
• Standard Chartered in New York
• Cameron Hanover