Late in the New York trading session, the price of November crude oil futures had plummeted 1.85% to $101.58, having been down more than 2% shortly after the release of inventory data from the Energy Information Administration. The EIA said that the US oil stockpile grew by 6.81 million barrels last week. That was several times greater than the consensus estimate from a Reuters survey for a rise of 1.5 million barrels.
Refinery utilisation fell to its lowest level since April, which is not particularly unusual, as this is a time of year when refineries are idled for maintenance, following the end of the US peak driving season and before the winter starts.
US oil output continues skyward, though, with production rising to 7.81 million barrels per day. US production has been boosted by new techniques, such as fracking and horizontal drilling, which have opened up previously untapped shale supplies.
Crude prices were already under pressure before the release of the data from the ongoing budget stalemate in which there have been few signs of progress. The longer the shutdown continues, the greater the damage to the economy, and that would likely curb demand in the US, the world’s largest consumer of oil.
The dollar has been strong today, supported by news that Janet Yellen is to be nominated for the role of chief of the Fed. A strong dollar reduces the appeal of oil to international investors, priced as it is in US dollars.