Crude slumps after inventory data

The price of crude oil, already depressed by ebbing concern over the risk of a disruption to Russian oil supplies, has sunk lower after a report from the US Energy Department shows another increase in supplies.

The Energy Information Administration today reported that crude oil inventories swelled by 1.43 million barrels last week to 363.8 million, the seventh consecutive weekly rise.

Activity at refineries dropped as the shift from the winter heating season gets underway. Many refineries begin seasonal maintenance work at this time of year, contributing to the decline in operation rate from 88.0% of capacity in the week prior to 87.4%.

As maintenance continues in the following weeks, we could see further gains in oil supplies going forward. Crude production climbed to 8.08 million barrels last week.

Crude oil futures for April fell 1.73% to $101.55 a barrel by mid-afternoon in New York.

Crude prices had benefitted from a premium for risk being priced in by the market on Monday, when the possibility of an escalation in the tensions between Ukraine and Russia stoked worries that oil supplies from Russia could be disrupted. Those fears have eased considerably since then, pressuring the price of oil. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.