Crude Oil Hits Five Week Lows, Inventory Fears Weigh

Crude futures dropped below $74 Wednesday, hitting five week lows as equities fell and data from an industry trade group showed large builds in already high U.S. oil inventories. Light, sweet crude for September delivery recently traded $1.61, or 2.1%, lower at $74.16 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.29 lower at $75.64 a barrel.

Late Tuesday, the American Petroleum Institute, an industry trade group, said oil inventories rose by 5.8 million barrels last week, while stocks gasoline and distillates, which include heating oil and diesel fuel, rose by around 2 million barrels each. The unexpected rise in inventories combined with falling equities Wednesday morning to push crude to the lowest level since July 7. The Dow Jones Industrial Average was recently down 48 points to 10357.

Growing stockpiles suggest that demand for oil and oil products is having trouble keeping up with supply, a worrying prospect for a market already flush with crude. Stockpiles at the Cushing, Okla., delivery point for Nymex benchmark crude are inching closer to record levels set in May. And inventories of gasoline remain above five-year averages amid the important U.S. summer driving season.

The Department of Energy is set to report its own statistics on inventories at 10:30 a.m. EDT Wednesday. These more influential data are expected to show a 1.3-million-barrel decline in crude stocks, according to a Dow Jones Newswires survey of analysts. Gasoline stocks are seen falling by 500,000 barrels, while distillate inventories are expected to grow by 1.2 million barrels.....Read the entire article.

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