Bearish Reports Drives Oil Prices Down
The bears bucked the bulls a bit after this week’s EIA report saying crude inventories hadn’t dropped nearly what was expected from shortages anticipated after Cindy and Dennis ripped through the Gulf of Mexico.
Oil prices dropped significantly after shooting up to $58.30 this morning. Prices began to plummet dropping as low as $56.10 before closing at $56.72 for the day. Heating oil dropped as well opening at $1.65 a gallon and going down to $1.59 a gallon. Gasoline barely moved at all going up less than a penny. The August contract closed today.
Oil refineries continued to pull their weight despite being forced to drop production under 93% because of the storms hitting the Gulf coast. Distillate levels increased by 2.3 million barrels to 122.7 million barrels, up 5% over a last year.
Gasoline levels dropped 1.3 million barrels to 211.3 million over all, running about the same as last year. Crude oil dropped 900,000 barrels to 320.1 million. That total is 7% over last year and a much better number than anticipated. Most analysts were expecting something closer to twice that number.
While Cindy and Dennis slipped past the oil fields in the Gulf, Emily has worked over Mexican oil futures. Pemex, the state owned oil company, said they slowed production by 3 million barrels, most of which heads north to the U.S.
Traders remain jitter regarding oil futures. As other tropical cyclones form in the Atlantic and some eventually hitting the Gulf region, futures will shoot back up quite quickly. Refineries will need to continue to work diligently not only to keep up gasoline levels but also to reboot heating oil levels as well. Right now the balance between the two could mean the difference.
John Stith is a staff writer for WebProNews covering technology and business.