Spanish recession, US overstock force oil investment down
Crude oil futures sank on the commodities market today; reports out of Cushing, Oklahoma suggested that inventories of the fuel in the US have risen to their highest levels in more than two decades. The high risk commodity fell by midmorning, and continued its tumble throughout the session, as traders pulled their investments for fear of further losses.
Cushing is the primary hub where New York Mercantile Exchange crude is stored, and its most recent 2.8 million barrel increase caused total stockpiles to soar to long-since unprecedented heights. As a result, both crude oil futures and oil investment in general suffered severe dips on market charts.
West Texas Intermediate for delivery in June fell more than 90 cents to $105.24 per barrel in electronic trading in New York. Though the benchmark managed to maintain its position above $105 per barrel, demand in the US does not appear to be rising as quickly as supplies of the fuel.
Brent’s losses proved even more severe, as the European benchmark lost $1.23 to settle at $118.43 per barrel in London. The troubling state of the economy in the UK, along with Spain’s official re-entrance into recession took plenty of momentum out of commodity investments, which were thriving even yesterday.
Experts have stated that the drastic oversupplying reigning over Cushing will likely be short-lived, and that once several key pipelines are reversed, the bulk of the hub’s glut will dissipate, causing a series of strong rebounds for crude. Traders however remained skeptical, considering safe havens a smarter investment strategy, so long as crude oil is not showing immediate signs of bouncing back.