U.S. Crude Oil Inventories Rose And International Oil Prices Fell Sharply

- May 24, 2019-

International oil prices fell sharply on the 22nd due to the continued significant rise in U.S. crude inventories last week.

New York light crude oil futures posted their biggest one-day drop in nearly three weeks.

At the close of the day, nymex light crude for July delivery was down $1.71, or 2.71 per cent, at $61.42 a barrel, its lowest close since May 13.

Brent crude for July delivery fell $1.19, or 1.65%, to settle at $70.99 a barrel in London.

Us commercial crude oil inventories rose for the second week in a row last week to 476.8 million barrels from 4.7 million barrels a month earlier, 4 percent higher than the five-year average, data from the us energy information administration showed Tuesday.

By contrast, analysts on average had expected crude inventories to fall by 2 million barrels in the week, according to a standard & poor's global platts survey.

Us gasoline stocks rose by 3.7m barrels month-on-month last week, distillates by 800,000 barrels and propane and propylene by 3.1m barrels.

Including commercial crude, refined products, propane and propylene, U.S. commercial oil inventories surged 16.8 million barrels a month last week, up from 14.6 million barrels a week earlier.

Last week, the U.S. imported 6.9 million barrels of crude oil per day, down 669, 000 barrels from the previous week.

The average daily crude oil processing capacity of refineries was 16.6 million barrels, down by 98,000 barrels month on month.

Refinery starts were at 89.9 per cent, down from 90.5 per cent in the previous week.

U.S. crude production remained high last week at 12.2 million barrels per day, up from 12.1 million barrels per day the week before.

Matt Smith, director of commodities research at clipper data, said: "despite the sharp drop in crude imports, U.S. crude refinery activity is below the annual average, contributing to a second straight week of rising crude inventories.

Over the past nine weeks, U.S. crude inventories have increased by more than 37 million barrels, or 8.5 percent.

Mr Smith added: "domestic production is up again and the us has released another strategic reserve, this time 1.2m barrels.

All of these factors have contributed to the rise in U.S. crude inventories.

Renewed tensions in the Middle East and a possible Opec extension of production cuts have failed to lift oil prices above trend, due to growing concerns about trade tensions affecting global growth and a strengthening dollar, said Ole Hansen, global head of commodity strategy at saxo bank in Denmark.

Stephen brunnock, an analyst at PVM oil brokerage, said that with the oil market in a delicate balance, u.s.-iran relations and changes in global trade could lead to $10 or so in international oil prices.

Phil Flynn, senior market analyst at PRICE futures group, said on Tuesday the recent rise in crude inventories will be a thing of the past as tight supply and demand for oil products means refiners will have to ramp up processing sooner or later.