US crude futures plunge $2.23/bbl on high inventories

20 June 2012 22:14  [Source: ICIS news]

HOUSTON (ICIS)--NYMEX light sweet crude (WTI) for July delivery settled at $81.80/bbl on Wednesday, down $2.23 versus the previous close, in response to the weekly supply statistics from the Energy Information Administration (EIA) showing a build in crude and refined products inventories.

The US Federal Reserve announced the extension of its economic stimulus program in order to push down borrowing costs, signalling that the economic recovery is stalling, which added to the downside momentum and volatility. It did not signal a third round of quantitative easing.

In response to the announcement, the stock market fell and the dollar rose against the euro but eventually both reversed direction.

Impulsive selling drove July WTI down to establish a new low for the year at $80.91/bbl, down $3.12, before the downside was exhausted and the dip was viewed as a buying opportunity, recouping a portion of the losses. The July contract expired at the end of the session.

ICE Brent for August delivery bottomed out at $92.60/bbl before settling at $92.69/bbl, down $3.07.

By: Ignacio Sotolongo
+1 713 525 2653

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