Crude Oil Falls Off A Cliff On Stunning Stocks Data
Crude oil futures crashed late Wednesday after the US Energy Dept stocks report showed inventories rising by a truly staggering 6.68 million barrels to 325.4 million barrels last week.
Analysts had been expecting an increase of only around 1 million barrels as US refineries operate at historically low levels to combat the glut of oil in the market.
In fact data showed that refinery activity increased by 2.1 percentage points to 84.6% of capacity last week.
Gasoline stocks were also forecast to rise by around 1 million barrels, but actually increased by 3.33 million, according to the Energy Dept. figures.
The huge price differential between spot month and forwards, known as contango, seems to be encouraging hoarding of crude. “Look at the contango. You’d be an idiot not to take advantage of that,” said one trader.
The Feb 2010 crude oil price is a massive 41% higher than the spot month Feb 2009. It seems that only in the peculiar set of circumstances we have at the moment can that situation prevail. In previous years of easy credit every man and his dog would be storing oil.
US fuel consumption during the four weeks ended Jan. 2 averaged 20.1 million barrels a day, down 2.9 percent from a year earlier, the Energy Department report showed.
Analysts had been expecting an increase of only around 1 million barrels as US refineries operate at historically low levels to combat the glut of oil in the market.
In fact data showed that refinery activity increased by 2.1 percentage points to 84.6% of capacity last week.
Gasoline stocks were also forecast to rise by around 1 million barrels, but actually increased by 3.33 million, according to the Energy Dept. figures.
The huge price differential between spot month and forwards, known as contango, seems to be encouraging hoarding of crude. “Look at the contango. You’d be an idiot not to take advantage of that,” said one trader.
The Feb 2010 crude oil price is a massive 41% higher than the spot month Feb 2009. It seems that only in the peculiar set of circumstances we have at the moment can that situation prevail. In previous years of easy credit every man and his dog would be storing oil.
US fuel consumption during the four weeks ended Jan. 2 averaged 20.1 million barrels a day, down 2.9 percent from a year earlier, the Energy Department report showed.