HardAssetsInvestor

Written by Sumit Roy  |

May 23, 2012

Crude Oil Report: WTI Plunges Below $90 As US Production Surges To 13-Year High, Cushing Inventories Hit Record

Details

Surging crude output in the U.S. offsets the reversal of the Seaway pipeline, pressuring WTI prices to the lowest levels since November.

The Department of Energy reported this morning that in the week ending May 18, U.S. crude oil inventories increased by 0.9 million barrels, gasoline inventories decreased by 3.3 million barrels, distillate inventories decreased by 0.3 million barrels and total petroleum inventories increased by 1.1 million barrels.

Crude oil prices plunged to fresh 2012 lows after the latest inventory figures. Brent was last trading below $106, while WTI fell below $90.

The story remains the same: Crude oil, along with other risk assets such as stocks, has been in correction mode amid mounting economic worries in the United States and China, as well as sovereign debt fears in the eurozone.

Some traders are even looking toward the end of 2012, when the U.S. Congress may once again be locked in a contentious battle to raise the debt ceiling, which is expected to be hit by the end of this year.

These economic concerns will likely keep crude oil within a downtrend in the short term. Our initial technical objective is between $98 and $102 for Brent, which may correspond with $83 to $87 for WTI, based on current spreads.

BRENT

WTI