International oil prices fell sharply 22nd, among other factors, including continued significant gains in U.S. crude inventories last week.
New York’s light crude oil futures price hit its biggest one-day drop in nearly three weeks. By the close of the day, the price of light crude oil futures delivered by the New York Mercantile Exchange in July fell by $1.71 to 2.71%, closing at $61.42 per barrel, the lowest closing price since May 13.
The price of Brent crude oil futures in London, which was delivered in July, fell 1.19 dollars, closing at $70.99 per barrel, or 1.65%. U.S. commercial crude inventories rose significantly for the second week in a row last week, up 4.7 million barrels to 476.8 million barrels, 4% higher than the nearly 5-year average, according to data released 22nd by the U.S. Energy Information Administration. By contrast, analysts had previously expected an average reduction of 2 million barrels of crude oil inventories for the week, according to a Standard & amp; Poor’s global Platts survey. Last week, U.S. gasoline inventories increased by 3.7 million barrels a month, distilled oil increased by 800,000 barrels, and propane and propylene inventories increased by 3.1 million barrels.
Including commercial crude oil, refined oil, propane and propylene, U.S. commercial oil inventories rose sharply by 16.8 million barrels a year last week, up from 14.6 million barrels a week earlier. The data showed that last week the United States imported 6.9 million barrels of crude oil, a year-on-quarter decline of 669,000 barrels, refinery daily crude oil processing volume of 16.6 million barrels, a reduction of 98,000 barrels, the refinery start rate of 89.9%, lower than the previous week 90.5%.
Last week’s average U.S. crude oil production remained high at 12.2 million barrels, up from 12.1 million barrels in the previous week. Matt Smith, director of commodity research at Brinkley Data, said: “Despite the sharp drop in crude oil imports, the number of crude oil refineries in the United States is below the annual average, prompting crude oil inventories to grow for the second week in a row. U.S. crude inventories have increased by more than 37 million barrels over the past nine weeks, an increase of as much as 8.5%. Smith added: “Domestic crude oil production in the United States has increased again, while the United States has once again released strategic reserve crude oil, this time released 1.2 million barrels.” All of these factors have driven the rise in U.S. crude oil inventories.
Ole Hansen, head of global commodity strategy at Saxo Bank in Denmark, said renewed tensions in the Middle East and a possible OPEC deal to cut production could not lead to a breakthrough in international oil prices, owing to growing concerns about trade tensions affecting global economic growth and the continued strength of the dollar. Stephen Brennock, an analyst at PVM Oil brokerage, said changes in U.S.-Iran relations and the global trade situation could cause international oil prices to fluctuate by about $10 trillion amid a fragile balance in the oil market. Phil Flynn22, senior market analyst at Price Futures Group, said the recent rise in crude oil inventories would be a thing of the past because of tight supply and demand for oil products and the refinery’s need to increase processing volumes sooner or later.