Bearish Inventory Report Sends Crude oil Prices Lower

The downside correction to oil prices moved into a third day with a bearish weekly oil inventory snapshot adding a bit more selling momentum. In fact oil prices are now at the lowest level they have been at in about six weeks. Certainly the post QE3 euphoria has been pushing oil prices lower but today's huge crude oil build was a catalyst for a strong round of not only profit taking selling but I suspect some new shorts coming into the market.

It does not happen very often in the oil complex but the current fundamentals have trumped all of other short term price catalysts today sending prices into a bit of a tailspin. It certainly changes the short term dynamics for me and as such we may see the downside move last a bit longer than I was originally expecting. The buy the dip mentality that I thought might come as early as this week may now be postponed until next week at the earliest.

In addition to the surprisingly large crude oil build the Saudi oil ministers comments from last week are still hanging over the market. He said global supply, demand and inventories do not justify the current price (around $100/bbl last week). The Saudis have been working with Kuwait the UAE and other members of the Gulf Cooperation Council to keep production at high levels to discourage higher prices. Saudi production is over 10 million barrels per day and at the highest level in years.

It is also serving to offset the 1 million barrels per day or so of lost Iranian crude oil production due to the sanctions.....Read Dominick Chirichellas entire article.

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