ST: Oil stocks hammered as U.S. crude supplies continue to climb
It also added that North Sea Brent has been trading $5 per barrel more than WTI since the beginning of this year, and it will continue through 2016. US crude inventories rose 2.6-million barrels last week to 456.21-million barrels, the government's Energy Information Administration said. Overnight, U.S. crude futures plunged to fresh six-and-a-half year lows before paring some losses in the afternoon session, following the strongest build in U.S. crude inventories in four months. The possible hike in interest rate by the US Federal Reserve in September also further spoiled the market sentiment pulling Dow Jones and Nasdaq indices lower. Shutting down production is costly and can be permanent, which makes "high-end costs a tentative floor which can easily be breached", the bank said. Smart money managers like to say that the cure for lower oil prices is lower oil prices, but all indications this summer are that oil producers from Saudi Arabia to the U.S. continue to pump despite lower oil prices. Demand growth was not keeping pace with supply, especially with the slowdown in China, the world's top energy-consuming nation and its second-biggest economy. Energy companies have slashed jobs and curtailed drilling activity in response. "It will take another few years before demand surpasses supply - all else being equal - though of course prices may react before then". As a result, the shares of US oil majors BP, Chevron, Exxon Mobil, Marathon Oil and ConocoPhillips tumbled on Wall Street. Concerns may abate, however, as the European Commission agreed in principle to a new three-year $95 billion loan package for Greece. A week earlier, U.S. crude stockpiles decreased by 1.7 million, in line with analysts' expectations for a 1.6 million draw. The latest data has only confirmed that fear and exacerbated a selloff that has put oil in a bear market for the summer, said Dean Hazelcorn, trader at the brokerage Coquest Inc.in Dallas. "WTI likely got oversold and will retest tomorrow if the rig count shows another increase, or next week if stocks rise again", he said. There was a slight increase in inventories as a US refinery closed for repairs last week. Steelers Lounge http://steelerslounge.com/2015/08/oil-stocks-hammered-as-u-s-crude-supplies-continue-to-climb/547/
