The swirling global credit crisis continues to pressure energy prices, but the petroleum complex received another jolt of bearish news this morning: A sharp increase in inventories of crude oil and products. Futures broke swiftly following the report in a chaotic session that saw the market initially move sharply higher on the heels of the big central bank rate cut hit.
That optimism came to an abrupt halt at , when the government reported crude oil stocks up 8.1 million barrels in the latest week, much higher than the 2.3 million barrels anticipated by the trade due to unclogging of import channels. Gasoline stocks rose 7.2 million barrels, compared to just 1 million expected. Distillates also beat guesses, falling 500,000 barrels, less than the 700,000 expected.
Demand continues to fall in the face of the slowing economy, with gasoline usage off 5.3% from last year and distillates down 8.3%.
However, breakdowns of the distillates suggested a net reduction in diesel supplies, while heating oil supplies grew. To read Bryce Knorr's complete weekly energy review, click HERE.