Rising Inventories Hit Oil Price

by Marilou Moursund on November 27, 2018

in Energy

The price of oil has tumbled in the last month from the mid-$70s to $51 this morning.  The Wall Street Journal has a good article today about all the factors affecting the price of oil.  From the linked article:

What sparked the reversal? Investors and oil traders had a sudden rethink about how much oil would be pumped onto world markets in coming months. The main factors: booming U.S. output, more Iranian oil supply being available than had been expected because of U.S. sanctions waivers, plus major producers Russia and Saudi Arabia ramping up production since the summer.

The surge in supply has reversed a key trend that underpinned the oil bull camp: inventories, or the amount of oil stored in tanks and on ships, looks to be rising again.

The International Energy Agency now predicts oil inventories will exceed their five-year average in OECD countries imminently. If they keep rising, that could put even more pressure on prices to fall the way they did in 2014 when inventories swelled.

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