OIL PRICES FALL SHARPLY AS CRUDE INVENTORIES SET TO HIT NEW RECORDS

OIL PRICES FALL SHARPLY AS CRUDE INVENTORIES SET TO HIT NEW RECORDS

Thursday, the 19th of February saw oil prices tumble to new lows as expectations of U.S. inventories to hit record highs increased.

According to data released by industry groups, the U.S crude stock rose by an impressive 14.3 million barrels. This figure was way higher as compared to the initial figure of 3.2 million barrels which many analysts had predicted.

If this information is confirmed at 1600 GMT (11.00am EST) by the US Energy Information Administration then this will without a doubt be the biggest weekly addition the barrels ever since data about them had started to be kept by people.

Benchmark Brent features for April traded at around $59.36 a barrel, this was a drop of $1.17 as it was initially being traded at $60 a barrel.

Also down was U.S. crude scheduled for March delivery. The US crude traded for $50.45 a decrease of $1.65 when compared to its earlier figures, in fact earlier the figure had fell by 3.7% and was trading for $50.23.

"U.S. shale production has not budged, resulting in swelling inventories," said the commodity sales manager at Tokyo's Newedge Japan, Ken Hasegawa,. "Global production does not seem to be falling much, either, except some hitch in Libya output."

Analysts are also warning that over supply might end up worsening the situation before we can be able to get a well balanced market due to the fact that the lower rig counts in the U.S. can only result into cuts in American output.

"Crude oil prices declined on concerns that the recent rally is overdone amid a continuing supply glut. The price rise of 34 percent since mid-Jan has largely been fueled by cuts to capital spending and falling U.S. rig counts, which have yet to result in a fall in near-term production," ANZ bank said.

Posted by Monica S. Laurence 2/20/15

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