News

January 22, 2010

Changing Inventory Levels In The US, Weaker Equity Markets and A Stronger Dollar All Combined To Depress The Oil Price Last Week

By Eithne Treanor

A week in the oil market is a long time where inventory levels change, sentiment shifts direction and economic data is revised and revisited. Weakness in the equity markets and a stronger dollar also impacted prices. Last week saw a fall in the oil price and the market had little good news to boost prices this week. The oil price dropped to its lowest level in the first month of 2010 on Thursday and in early trading on Friday, the oil price was just below US$76 a barrel.

The world’s biggest oil consumer has curbed its appetite for energy and with lower fuel demand, down 1.8 per cent from a year ago, refineries are cutting back. The situation is worse than expected with refineries now working at just over 78 per cent capacity. The US energy department says refinery utilization is now at its lowest since 1989 and gasoline inventory is at its highest since March 2008. Stockpiles are now up almost 4 million barrels at 227.4 million. The oil price could fall further...