The global price for oil plummeted on Wednesday, with the US crude futures sinking below $70 per barrel, the first in this month, following the increase of the country's crude stockpiles by 6.5 million barrels, triple that of what analysts had originally forecasted. Meanwhile, exports dropped.
The global oil market has been alarmed with the incessant increase of oil prices last week as well as in the last few days brought by the concerns on Iran's sanctions and the growing trade tensions between the United States and Saudi Arabia following the death of Jamal Khashoggi, a Saudi journalist.
But as of yesterday, the report from Reuters said that the US crude oil CLc1 dipped at $2.17, or 3 percent, settling at $69.785 per barrel.
Brent crude, on the other hand, slumped to $1.31, or 1.6 percent, at $80.10 a barrel by mid-afternoon of Wednesday, barely registering gains of $1.15 per barrel from the previous three sessions.
The global benchmark has been trading close to $7 below the four-year high of $86.74 earlier this October.
Jim Ritterbusch of Ritterbusch and Associates told the news agency that the last oil price decline exceeds way below their expected figure.
Bob Yawger, director at Mizuho in New York seemed to concur on the observation while adding that traders were quick to bail out from the trade as soon as the prices were going down below $70 which, in effect, further compounded the decrease.
As pointed out over at CNBC, American crude stocks have risen to 6.5 million barrels last week. The trend has been going on for four straight weeks already and is expected to continue, according to experts drawing a conclusion from the latest US Energy Information Administration (EIA) findings.
The EIA report indicated a massive decline of crude exports by 1.8 million barrels per day, which is characterized as bearish by the agency.
Inventories rose sharply as well despite the temporary shutdown on US crude production from 300,000 bpd to 10.9 million bpd last week.
Market analysts have been looking at the effects of the decision to temporarily close offshore facilities in the Gulf of Mexico as Hurricane Michael passes through the country.
Moreover, the issue of the disappearance of the prominent Saudi critic and journalist, Jamal Khashoggi, has brought impact on the oil market activities as of late.
The US has been quick to point out the involvement of the Saudi leadership on the disappearance of the press member, further suggesting that sanctions could soon follow after.
