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US Crude Crashes As Data Reveals Unexpected Surge in Supplies

May 22, 2019 at 16:59 by Andrew Moran

Crude oil futures are crashing midweek after the US government reported an unexpected increase in domestic inventories. US crude prices are further sliding on global supply glut concerns, especially after domestic output climbed higher this past week. 

July West Texas Intermediate (WTI) crude futures plunged $1.75, or 2.77%, to $61.38 per barrel at 16:17 GMT on Wednesday on the New York Mercantile Exchange. US crude prices have had a rough May, but they are still up more than 34% year-to-date. 

Brent, the international benchmark for oil prices, is also sliding in the middle of the trading week. July Brent crude futures slipped $1.46, or 2.02%, to $70.72 a barrel on London’s ICE Futures exchange. Similar to US crude, Brent prices have tumbled about 5% this month, but they have advanced 30% so far this year. 

According to the US Energy Information Administration (EIA), US crude oil inventories climbed by 4.7 million barrels for the week ending May 17. The market had forecast a decline of two million barrels. Domestic crude production edged up 100,000 barrels to 12.2 million barrels per day (bpd). Gasoline supplies climbed by 3.7 million barrels, while distillate stockpiles increased 800,000 barrels. 

The US Baker Hughes total oil rig count came in at 802, down from last week’s 805. 

This comes as the Organization for Economic Co-Operation and Development (OECD) revised down its global growth forecast for 2019, leaving investors concerned that sluggish economies could exacerbate the international supply glut. 

A prolonged trade war between further weighed on contracts. With no scheduled talks between US and China trade representatives, there are fears that the trade spat could linger throughout the summer and possibly into the holiday season. The last time the two sides met was on May 10 when the round of talks ended in a stalemate. Soon after, the US raised tariffs to 25% on $200 billion in Chinese imports, followed by Beijing’s retaliatory levies on more than 5,000 American goods. 

But crude prices could soon experience a boost because Saudi Arabia confirmed it was committed to maintaining a balanced and sustainable market. 

In other energy markets, July natural gas futures fell $0.045, or 1.75%, to $2.56 per million British thermal units (btu). July gasoline futures slid $0.05, or 2.4%, to $1.97 a gallon. July heating oil futures tumbled $0.05, or 2.33%, to $2.035 per gallon. 

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