Oil prices tumble amid surging United States crude inventories

Daniel Fowler
June 8, 2019

On Wednesday, Brent and WTI hit their lowest levels since mid-January at $59.45 and $50.60, respectively, after US crude production hit a new record high and stockpiles hit their highest since July 2017.

US crude stocks rose unexpectedly last week, while gasoline and distillate inventories built more than expected, industry group the American Petroleum Institute said on Tuesday.

Oil remained bearish on Thursday morning in Asia as the USA reported record inventories, while demand continues to be threatened by economic slowdown and trade disputes.

Oil prices steadied on Thursday after falling to near 5-month lows in the previous session, but sentiment remained weak as markets are under pressure from rising USA supply and a stalling economy.

In particular, WTI plunged over 20 percent from its April peak to hit the lowest level since January, thus sliding into bear-market territory.

Prices had been near flat most of the session as sentiment remained dim on fresh signs of a stalling global economy and ongoing concerns about USA crude supply growth.

On Wednesday, Brent and WTI sank to their lowest levels since mid-January at $59.45 and $50.60 respectively, after USA crude production hit a new record-high and stockpiles climbed to their highest since July 2017.

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The U.S. West Texas Intermediate crude futures were trading at $58.46 per barrel at 0641 GMT. Mr Barkindo said that the OPEC are committed to keeping oil markets balanced beyond this year and beyond.

Therefore, the bank held that the high compliance of OPEC+ to supply cut and USA sanctions that lowered production in Venezuela and Iran would lead to a faster drop in global oil supply than weaker demand over the last six month.

The Middle East-dominated producer club of the Organization of the Petroleum Exporting Countries (OPEC) as well as some non-affiliated producers including Russian Federation, known as OPEC+, have been withholding oil supply since the start of the year to prop up the market.

Morgan Stanley dropped its forecast for increased in oil demand for 2019 from 1.2 million barrel per day to 1.0 million barrel per day, and cut its Brent price forecast for the second half of 2019 to $65-$70 per barrel, from $75-$80.

"Demand is weakening much more rapidly than we had expected".

The severe downturn in a matter of weeks comes as oil traders fret over slowing global growth that the Trump administration's unresolved trade disputes with China and Mexico have only exacerbated.

Members of the OPEC+ group are set to discuss whether to extend their supply curbs further later this month.

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