Supply Glut Pushing Crude Oil Into Bear Market

Supply Glut Pushing Crude Oil Into Bear Market

$USO, $OIL, $MS

Crude Oil’s fall approaches a Bear market in New York as US stockpiles increase, adding to a glut.

Inventories rose 2.47-bbls last week, Energy Information Administration  (EIA) data show, in contrast to the 2.2-M bbl drop forecast by analysts surveyed by before the report.

Supplies rose even as refineries processed Crude Oil at a record pace and the nation’s output was steady near the highest mark in more than 40 yrs.

West Texas Intermediate (WTI) Crude Oil has dropped 20% in 6 weeks, nearing the definition of a Bear market, on signs the global surplus will be prolonged as Iran bids to restore output after its nuclear accord.

The Bears are firmly in control. The rise in inventories was enough to push the market over the edge and break through Key support at 50.

The USD is up this month, also putting pressure on commodities as it reduces the appeal of buying assets priced in the US currency. The Commodity Index of 22 raw materials fell as much as 1.1% to the lowest since April 2002.

The increase in Crude Oil stockpiles left them at 463.9-M bbl, almost 100-M bbl above the 5-year seasonal average. Supplies at Cushing, OK, the delivery point for Oil futures traded in New York, rose 813,000 bbl to 57.9-M.

There is a possibility that the downturn in the global Oil industry may be more severe than in Y  1986, when business endured the deepest slump in 45 yrs, according to Morgan Stanley (NYSE:MS)

OPEC output is responsible for the oversupply that is pressuring prices, analysts said in a report this week.

Stay tuned…

HeffX-LTN

Paul Ebeling

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