This is pretty big news.....
Energy News
03/28 16:11
Crude Oil Slumps as Record Imports Send U.S. Inventories Higher
By Mark Shenk
New York, March 28 (Bloomberg) -- Crude oil slumped more than 5 percent, the biggest drop since early December, after a greater- than-expected rise in U.S. inventories signaled ample supplies for refiners in the weeks ahead.
Inventories rose 3 percent to 302.6 million barrels in the week ended March 23, the American Petroleum Institute said late yesterday. It was the third straight week that supplies rose by at least 8 million barrels. The increase was propelled by record daily imports of 10.24 million barrels and a lower refining rate.
``These are very impressive numbers, especially the imports,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis. ``It's pretty unusual to build supplies so fast.''
Crude oil for May delivery fell $1.44, or 5.2 percent, to $26.25 a barrel on the New York Mercantile Exchange, the biggest one-day drop since Dec. 5. The decline wiped out gains made during the previous three sessions.
In London, Brent crude oil for May settlement fell 62 cents, or 2.4 percent, to $25.27 a barrel on the International Petroleum Exchange.
The 8.86 million-barrel rise in crude oil stockpiles last week was above the gain of 200,000 to 800,000 barrels expected by analysts in a Bloomberg survey.
U.S. inventories fell to a 27-year low earlier this month and have gained in three consecutive weekly reports since then. Supplies now are 4.5 percent higher than they were at this time last year.
U.S. refineries ran at 89.5 percent of their capacity last week, down 1.8 percentage points from the week before, as some companies carried out annual maintenance programs. The production rate will increase in coming weeks as refiners build up gasoline stockpiles for the summer vacation season, traders said.
OPEC Production
Earlier this month, the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world's oil, said it would trim production quotas for a second time this year. The producers have cut the quotas by a total of 9.4 percent to prop up prices.
Crude oil inventories may start to fall again once refiners start to build up gasoline supplies, said William Brown, president of consultants W.H. Brown & Co. in New York.
``We could see $30 crude oil by Memorial Day because we will have the OPEC cuts and a slowdown in North Sea production due to maintenance,'' Brown said.
The holiday at the end of May is the traditional start of the summer vacation season in the U.S., when gasoline demand peaks.
The API report showed drops in inventories of petroleum products, including gasoline and heating oil. Prices for both opened higher but changed direction as the day progressed.
``With the huge build in crude, the products couldn't sustain their rise,'' said Donald Luke, a trader and vice president at Fimat USA Inc. in New York.
Gasoline for April delivery fell 2.93 cents, or 3.1 percent, to 91.02 cents a gallon on the Nymex, the first drop in six sessions. Gasoline is still up 16 percent this year.
Heating oil for April delivery fell 2.87 cents, or 3.7 percent, to 75.07 cents a gallon on the Nymex. Prices have fallen 17 percent this year. |
