The post-Fed rally in oil is over.
On Thursday morning, the price of West Texas Intermediate crude oil trading in New York was down more than 3.5% to around $US43.10 a barrel.
The latest drop in crude comes after a rally on Wednesday that followed the Fed’s latest announcement, which the market interpreted a dovish from the Fed, leading to a massive rally in US stocks, the US dollar tanking, and a rally in gold.
After Wednesday’s rally, the reality is that there is still massive oversupply in the US oil market.
On Wednesday, the Energy Information Administration said that crude oil inventories rose 9.6 million barrels last week from 4.5 million the previous week bringing inventories to their highest level in at least 80 years.
Here’s the latest chart of WTI, which is back near a six-year low after falling below $US43 a barrel earlier this week.