Just when everyone was starting to worry the fuel prices were headed higher we find out that we have a lot of inventory. Fuel prices plunged across the board Wednesday, giving up a week of gains with unexpectedly large U.S. crude reserves suggesting demand for energy has eroded even further.
Sweet crude for February delivery tumbled 12 percent, or $5.95, to settle at $42.63 a barrel on the New York Mercantile Exchange after the report was released.
Crude oil stocks rose by 6.7 million barrels, the U.S. Energy Information Administration said, more than the 900,000-barrel increase analysts had expected.
“We had pretty large builds in all categories. I think it’s a confirmation of the weak demand environment. Any time the market sees physical confirmation of that in inventory building, it’s just another reason to move lower, and that’s what we’re seeing right now,” said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.
Oil demand in the United States, as well as Europe and Asia, has been eroded by the global economic slowdown.
The bearish data overshadowed the conflict in Gaza, both of which had supported oil prices early in the week.While the Gaza conflict did not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world’s oil.
Let’s see what tomorrow brings!
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