Published on : Oct 27, 2015
Prices of oil dropped to two months lows on Tuesday amid expectations that crude stockpiles in the United States grew for the fifth consecutive week last week.
Sweet and light crude meant to be delivered in December recently dropped 2.3 per cent or US$ 1.01 to reach US$ 42.97 per barrel on the New York Mercantile Exchange. Prices were being traded at the lowest intraday level since 28th of August. The global benchmark Brent declined 1.5 per cent or 74 cents to reach US$ 46.80 per barrel on ICE Futures Europe.
The United States Energy Information Administration will be releasing its weekly inventory data on Wednesday and traders anticipate that the agency will report that US oil stockpiles grew last week owing to refineries bringing less crude while dealing with seasonal maintenance.
Industry group American Petroleum Institute was slated to reveal its own data regarding the US oil inventories later on Tuesday.
Even though the seasonal demand is low, the United States has been importing more crude oil as comparatively high domestic prices push refiners to purchase foreign oil, which could increase the stockpile builds.
Director of Mizuho Securities USA Inc.’s futures division Bob Yawger said that the market is currently preparing for what seems to most certainly be another massive storage build on Wednesday.
The US crude inventory was pegged at 476.6 million barrels as of October 16. Stockpiles in April reached a record high of 490.9 million barrels.
Oil prices have declined for two consecutive weeks and Brent has now reached well below the US$ 50 per barrel level that is deemed psychologically important. just a little more than a year ago, oil was trading at more than US$ 100 per barrel when a combination of tepid demand and ample supply brought it down to levels that were last witnessed during the financial recession.