WTI Crude Futures Declined SharplyBy Lex Yaranu | Thursday, July 23rd, 2015
West Texas Intermediate crude futures showed a sharp decline early this week, falling below $50 a barrel. This is the first time since almost four months the WTI has seen such a sharp decline. This occurs amid an expected build in United States crude stockpiles.
Marketers are carefully monitoring crude oil and oil prices in the wake of the political developments between Iran and the U.S.
This week the U.S. Energy Information Administration reported U.S. crude oil inventories did in fact rise 2.5 million barrels for the week ending July 17th. Analysts were expecting a crude-stock fall of 2.3 million barrels. The American Petroleum Institute reported, however, that as of late Tuesday there was an increase of 2.3 million barrels.
The Nymex crude key delivery point at Cushing, Oklahoma increased by 813,000 barrels last week, despite a forecast of a lower increase of 300,000. Total crude inventories in the U.S. stood at over 463 million barrels. According to market analysts this is the highest level for this time of year in 80 years.
Last week’s nuclear deal between Iran and the U.S. concluded effectively ending long standing sanctions on Tehran with the county’s agreement to curb its disputed nuclear program. As Iran is reportedly hoarding 30 million barrels of oil in reserve, the deal could affect crude oil stocks in the U.S. for an indefinite period of time. Some analysts speculate that it will take Iran several months to start moving oil out of the country.
This comes at a time when global oil production is already above demand after the boom in American shale oil production. Requests by oil market experts to reduce production last year were ignored, and the Organization of Petroleum Exporting Countries opted to allow unrestricted production to continue.
Concerns over high domestic U.S. oil production have been evident with New York traded oil futures, and ICE Futures Exchange in London fell 62 cents trading at $56.42 a barrel. This indicates that the London Traded Brent prices are reflecting fears that Iran entering the global oil export market will cause an oil supply glut.
Moreover, the extent of the crude contracts between WTI and Brent stopped at $6.54 per barrel, as against Tuesday’s trade which closes at $6.18.Published in News