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Oil Prices Tumble as U.S. Supplies Surge
Oil futures fell 3% today as traders reacted to news that crude oil stockpiles in the U.S. expanded last week by their largest amount in at least 34 years.
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Oil futures fell 3% today as traders reacted to news that crude oil stockpiles in the U.S. expanded last week by their largest amount in at least 34 years.
Market analysts had expected a 1 million-barrel increase. But the U.S. Energy Information Administration reported on Monday that supplies ballooned by 14.4 million barrels.
EIA’s analysis ended weeks of declining supplies that made observers think the oil market was finally moving toward balance between supply and demand. Oil, which traded for as much as $115 three years ago, sagged below $47 again by midday today.
Members of the Organization of the Petroleum Exporting Countries agreed two months ago to trim their output by at least 200,000 barrels per day. But the agreement won’t be ratified until the end of November, unless it collapses by then.
Even if adopted, built-in exemptions for several producers would enable continuing growth in the cartel’s overall output. OPEC pumps about 40% of the world's petroleum.
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