Crude Oil Pummeled Again
07/16/08 - 05:18 PM EDT
Chuck Marvin
The energy space got crushed for the second consecutive day Wednesday as bearish oil inventory figures, falling demand for oil and its derivative products, and worries about a slowing economy eliminated all remnants of optimism in energy futures and equities markets.
West Texas crude futures for August delivery dropped $4.14 to $134.60 at the New York Mercantile Exchange, and Brent crude lost $3.52 to settle at $138.75. Reformulated gasoline slid 8 cents to $3.28 a gallon, while heating oil mustered a fractional gain to close at $3.84 a gallon. Near-term natural gas fell 8 cents to $11.40 per million British thermal units. August WTI treaded water near the $139-a-barrel level through the overnight trading sessions in Asia and Europe, wounded by its record-breaking free fall of $10.50 incurred Tuesday morning. However, new oil inventory data released at 10:30 a.m. Wednesday by the Energy Information Administration showing surprisingly large builds in crude and gasoline stores sent oil traders scurrying to reverse their remaining net-long positions, and August WTI collapsed $7 in less than 15 minutes. The EIA figures showed that commercial crude inventories grew by 2.95 million barrels during the week ending July 11. Analysts were expecting a draw of 2.2 million barrels, according to a Bloomberg analyst survey. Motor gasoline stocks jumped 2.47 million barrels vs. analyst forecasts for an 800,000 barrel draw, and distillate inventories increased by 3.2 million barrels -- 1.2 million barrels more than analysts were expecting. Total petroleum stocks including crude oil and all petroleum products grew by 7.5 million barrels - the largest weekly increase since June 2007.
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