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Massive inventory drives crude oil prices lower

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Crude oil price volatility

April futures contracts for West Texas Intermediate, or WTI, crude oil closed at $50.76 per barrel on March 5, 2015. Crude oil prices tested the lows of February 10 and 20. March 5 was the sixth down day in the last ten trading days. The average down days have been 0.60% lower than the highs on up days over that same period.

April futures for WTI oil settled at the day’s low on March 5, 2015. It was down by 1.49% over the previous day. The total volume was at 348,501 contracts, dropping by 115,488 contracts over the previous trading session.

Global oversupply has led to a massive decline in crude oil prices. Crude oil prices are trading 50% lower than where they were in mid-June 2014.

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Crude oil prices trade lower

Conflicting pressures have been at work behind the crude oil price scene in February 2015. Bullish developments including less supply from Libya, a record reduction in rig counts, and decreased capital expenditures by oil exploration and production companies have boosted crude oil prices. On the other hand, bearish factors like huge supply and record inventory levels have pushed crude oil prices down.

On March 4, 2015, the U.S. Energy Information Administration, or EIA, reported that weekly crude oil inventories were up by 10.3 million barrels, or MMbbls, from the previous week. This was more than forecast. Unexpectedly, crude oil prices closed 2% up for the day. But the rally was short-lived. The inventory report ultimately ignited oversupply concerns, and crude oil prices fell the next day.

The EIA will release its next US crude oil inventory report on March 11, 2015.

Crude oil price fluctuations impact oil-focused ETFs including the United States Oil Fund LP (USO) and the PowerShares DB Oil Fund (DBO). They also affect upstream oil companies such as Chevron (CVX), Continental Resources (CLR), and ExxonMobil (XOM).

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