Crude oil futures are being hit hard the week-ending February 9. Both U.S. West Texas Intermediate and international favorite Brent crude oil futures have trended lower all week. As of Thursday, they have posted five consecutive lower closes.
The catalysts include external factors like rising U.S. Treasury yields and stock market volatility. However, most of the selling pressure is being generated by worries over increasing output and rising global supplies. In addition to concerns about rising supplies, investors are also concerned about the stronger dollar’s impact on foreign demand for U.S. oil and lower demand due to seasonal maintenance.
As of early Friday, March WTI crude oil is testing its lowest level since January 2 and April Brent is challenging its lowest level since December 22. Both markets have wiped out all of this year’s earlier gains and are now trading lower for 2018.
One factor encouraging investors to begin shedding their long positions was the U.S. Energy Information Administration’s weekly inventories report.
According to the EIA, U.S. commercial crude inventories rose by 1.9 million barrels to 420.3 million in the week through February 2. Traders were looking for a 3 million barrel build. The increase was being blamed on a buildup of stockpiles in the Gulf Coast refining hub, where refiners are winding down operations for seasonal maintenance.
Stockpiles of gasoline and distillate fuels such as diesel also…