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Petroleum industry

Crude Oil Prices Plummet Below $50 a Barrel on Swollen Inventories

Strategic Insights

— 1 min read

Crude oil prices fell significantly on Tuesday, sinking below $50 a barrel for the first time in a week, as swollen inventories continue to weigh on the market. The growing imbalance between massive crude supplies and still-weak demand remains a major roadblock to efforts to push higher. Traders are eyeing U.S. equities as a proxy for the broader economy, hoping a sustained rally will trickle through to a recovery in oil demand.

Key Takeaways:

  • Crude oil futures on the New York Mercantile Exchange (Nymex) settled down $1.90, or 3.7%, at $49.15 a barrel, after slipping as low as $48.89 a barrel just before the market closed.
  • May Brent crude on the ICE futures exchange settled $1.02 lower at $51.22 a barrel.
  • U.S. crude stockpiles are currently at 16-year highs after four straight weeks of gains, and forecasts call for a fifth increase.
  • Crude inventories are seen rising by 2 million barrels for the week ended April 3, according to a Dow Jones Newswires survey of 13 analysts.
  • Late Tuesday, the American Petroleum Institute reported a 6.9-million-barrel gain in oil inventories, a 2.9-million-barrel rise in gasoline stocks, and a 2.3 million-barrel fall in distillate inventories on the week.
  • Kyle Cooper, director of research at IAF Energy Advisors, stated that true level of total U.S. inventories is even higher, since the federally managed Strategic Petroleum Reserve is currently up at all-time highs.
  • The growing imbalance between massive crude supplies and still-weak demand remains the biggest roadblock to efforts to push higher.

Statistics:

  • Crude oil futures on Tuesday settled at $49.15 a barrel, marking a 3.7% decline.
  • U.S. crude stockpiles are at 16-year highs after four straight weeks of gains.
  • Crude inventories are seen rising by 2 million barrels for the week ended April 3.
  • The American Petroleum Institute reported a 6.9-million-barrel gain in oil inventories.
  • Distillate inventories fell by 2.3 million barrels on the week, according to the American Petroleum Institute.

Sources:

  • Hyun Young Lee, Dow Jones Newswires (613-237-0669; hyunyoung.lee@dowjones.com)
  • Dow Jones Newswires 04-07-09 1644ET
  • American Petroleum Institute
  • IAF Energy Advisors

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