Yesterday’s crude US stockpile and inventory update was heard around the world. While analysts expected crude inventories to rise, gasoline inventories were expected to dip in anticipation of the summer driving season. However demand for petroleum products at the gas pump in the US was not just flat but down. U.S. crude oil stocks rose 3.78 million barrels in the week to May 6, much higher than the 1.4 – 1.1 million barrel analyst build forecast, while Gasoline stocks rose 1.28 million barrels versus a forecast for a 200,000 – 700,000 barrel drop, the first such reversal in the last 12 weeks, triggering worries about gasoline consumption in the peak US driving season and its follow on impact on demand.
While NYMEX crude oil futures for June delivery had gained more than 5% percent after the 15% rout last week, they fell by 5.5% to settle below the triple digit benchmark at 98.21, the second time in two consecutive weeks. Crude oil futures had briefly dipped below the 95 US$ dollars per barrel mark in early trading in Europe last Friday but had prices had recovered by the time trading opened in New York.
CME triggered a rare 5 minute halt in trading within Crude, Gasoline and Heating Oil future contracts in yesterday’s trading. Silver and Gold prices followed the decline in oil contract. Earlier in the day China inflation number eased indicating that the Chinese economy may be finally cooling but crude oil futures had stayed well above 103 US$ a barrel while the market waited for the US inventory numbers to be released at 10:30 am EST.
The May inventory update, the rising dollar, the cooling economy in China will spell more trouble for crude oil futures in the remaining two day of trading this week. Analysts have now started talking about seeing the 90 dollar level for June delivery at NYMEX before May is out.