Overnight WTI crude oil futures fell below the $40 a barrel level, slipping as low as $39.91, the lowest level seen since August 27 this year.
The chart below, supplied by CBA commodity researchers Vivek Dhar and Kofi Mensa, shows the current level of US crude oil inventories compared to recent years.
Clearly, compared to recent years, it’s at an extremely elevated level for this time of year. Last week inventories rose by 300,000 barrels to 487.3 million barrels, or 31 days of supply at the current rate of usage. Not since 1930 have inventories been at that level for this period of the year.
While crude futures crawled off the mat in the latter parts of trade, buoyed by modest US dollar weakness and a strong rally in stocks following the release of the minutes of the October US FOMC meeting, it’s easy to understand why crude prices have fallen 34% since late June this year.
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