September Crude Oil futures finished the week sharply lower and at a new low for the year. Let’s look at the numbers.
Oil lost a little over 3.0% on Wednesday after the release of bearish weekly inventory figures. It has closed lower thirteen times in July and is rapidly approaching a 25% decline for the month. Buyers didn’t even show up when the market tested the previous contract low. This is a sign that the funds aren’t afraid to sell weakness and that buyers are pulling bids.
According to data from the U.S. Energy Information Administration, weekly U.S. crude oil inventories surprisingly rose by 2.5 million barrels during the week-ended July 17. Traders were looking for a drawdown of 1.5 million barrels. Heavy U.S. shale production and increased imports from Columbia, Ecuador, Kuwait and Nigeria were the catalysts behind the increase.
Not to be overlooked, OPEC production also continued to grow with the cartel adding another 600,000 barrels a day to the global supply glut. Saudi Arabia and Iran shared the credit for this increase.
While the main focus this week has been on overproduction, there are some traders/analysts out there who believe that the recent bearish trend of rising U.S. oil production may actually be moderating. This line of thinking, however, has not showed up in the price action.
The World Bank also put out supportive news when it increased its 2015 forecast from $53 per barrel in April to $57 a barrel.…