US inventories continue rising, oil investment falters

Crude oil prices continued their prolonged tumble on the commodities market today, falling for the sixth consecutive day, as European economies showed further signs of deteriorating.

Perpetually increasing stockpiles of the fuel in the US also took a toll on oil investment.

West Texas Intermediate crude oil futures for delivery in June lost $1.24 to settle at $95.77 per barrel in New York trading, while Brent prices for June settlement fell 92 cents to $111.81 per barrel during Europe’s equivalent market trading session.

Investments in the commodity saw an early obstacle today, as the latest report from the US Department of Energy showed yet another severe spike in the nation’s inventories in Cushing, Oklahoma. The total amount of stockpiles in the storage hub now stands at its highest mark in more than twenty years. Signs of slumping demand out of the euro zone and China added to the negative pressure on crude.

Traders continued a massive sell-off of their investments in higher risk commodities such as crude oil and base metals, choosing instead to wait out the storm in safer havens.

The rapidly cooling turmoil that even a month ago dominated the Middle East also contributed to the fact that crude oil is just not getting the same kind of momentum it did in recent weeks.

With violent escalations between Iran and the West regarding the OPEC nation’s nuclear program now increasingly unlikely, crude oil investment has lost one of its major lines of support on the charts.

Spain’s re-entrance into recession and France’s new government are casting a doubt on whether Europe will recover from debt.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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