Sometimes it’s the smallest of movements that can have the greatest impact.
This is no better demonstrated than in the chart below, supplied by the Commonwealth Bank. It shows US crude oil inventories, broken down by days supply.
Despite being at the highest levels seen for this time of year in at least seven decades, it was the tiny uptick in inventory levels seen last week, indicated with the red arrow, that was enough to send front-month WTI crude futures tumbling below $US42 per barrel for the first time since April overnight.
“US crude oil inventories unexpectedly rose by 1.67mmbbl [million barrels per day] to 521mmbbl in the week ending 22 July – well above forecasts of a 2.02mmbbl decrease, wrote Vivek Dhar, an energy and commodities analyst at CBA. “In the same week, US oil production rose marginally to 8.51mb/d, marking the third consecutive week of increasing output.
“The increase in US crude oil inventories has reversed optimism that oil markets are tightening,” he added.
US gasoline inventories also rose by 452,000 barrels over the week, more than 10 times the amount expected, heaping further pressure on crude prices.
From the high of $US51.67 per barrel struck on June 9, front-month WTI futures have now fallen by over 18%. Front-month Brent futures — the global benchmark — have also fallen by a similar margin.