Mecklai: Rising crude stocks to put pressure on prices
US crude stockpile is expected to rise by 2.3 million barrels in a report due for release later today for the week ended 8th March, which in turn would pressurize prices. However, upbeat US economic reports would continue to provide support to oil prices.
March 13, 2013 / 18:17 IST
Mecklai graph of the day: Rising crude stocks
The oil prices have been under pressure lately as the production of crude oil goes high while the demand remains low contributing to a build up in the inventories, sending the prices lower. A rise in crude stockpiles for seventh straight week in US is weighing on crude prices, offsetting the support gained from the strong equity markets.US crude production has been climbing at a rapid pace since 2008 after a long period of decline as a result of better technology (such as hydraulic fracturing and horizontal drilling) that has allowed drilling in previously uneconomic areas. A trimmed forecast for economic growth in the United States and the euro zone in OPEC's monthly report, along with expectations of rising US oil output, applied pressure to oil prices. Moreover, the U.S. Energy Information Administration (EIA) has not only cut its 2013 world oil demand forecast, but has also cut the forecast for non-OPEC output. The OPEC yesterday indicated that global oil demand is set to grow 800,000 barrels per day in 2013, unchanged from its previous forecast and suggested downside risks to demand growth. Looking ahead, U.S. crude stockpile is expected to rise by 2.3 million barrels in a report due for release later today for the week ended 8th March, which in turn would pressurize prices. However, upbeat US economic reports would continue to provide support to oil prices.Below graph shows the relationship between WTI crude prices and the US crude oil inventories
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