Oil Prices Plummet to 8-Week Low Amid Rise in Fuel Stockpiles and Anemic Demand

Strategic Insights -

Market expectations of rising fuel stockpiles and months of anemic demand have kept a lid on oil prices, sending benchmark U.S. crude-oil futures to a fresh eight-week low. The decline comes as the world's biggest oil consumer, the U.S., is seen to have stockpiles of refined oil products rising for a fifth straight week. Analysts predict gasoline inventories rose by 900,000 barrels and stocks of distillates rose by 1.9 million barrels in the week ended July 10.

Key Takeaways:

  • Benchmark U.S. crude-oil futures declined to a fresh eight-week low, settling at $59.52 a barrel.
  • Oil has fallen in nine of the past 10 sessions, with the slope of the drop easing due to higher stockpiles and weak demand.
  • Analysts surveyed by Dow Jones Newswires expect gasoline inventories rose by 900,000 barrels and stocks of distillates rose by 1.9 million barrels in the week ended July 10.
  • The U.S. Energy Information Administration releases its weekly data at 10:30 a.m. EDT Wednesday, while oil data from the American Petroleum Institute are due at 4:30 p.m. EDT Tuesday.
  • Commodity analysts at Morgan Stanley forecast prices at $55 a barrel on average through September, but hiked their oil price forecast $20 for 2010, to $85 a barrel.
  • Goldman Sachs Group Inc. separately cut its July crude forecast slightly but believes crude will trade at $80 a barrel three months from now.

Statistics:

  • Benchmark U.S. crude-oil futures declined by 17 cents, or 0.3%, to $59.52 a barrel.
  • Oil has fallen in nine of the past 10 sessions with a slope of the drop easing.
  • Gasoline inventories are seen to have risen by 900,000 barrels in the week ended July 10.
  • Stocks of distillates are seen to have risen by 1.9 million barrels in the week ended July 10.
  • The U.S. Energy Information Administration releases its weekly data at 10:30 a.m. EDT Wednesday.
  • Crude stocks likely fell by 1.5 million barrels, and refineries likely operated at 86.7% of capacity.

Sources:

  • Dow Jones Commodities News via Comtex
  • Peter Beutel, president of Cameron Hanover
  • American Petroleum Institute
  • U.S. Energy Information Administration
  • Morgan Stanley
  • Goldman Sachs Group Inc.