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Inventories Climb for 10th Straight Week

The spot price for West Texas Intermediate (WTI) closed at $40.20 on December 2, 2015, dipping below the $40.00 threshold momentarily in day trading. The closing price is the lowest since August 26, and has not exceeded the $50.00 mark since July 21. WTI has lost 13% of its value in the last month, falling from $46.14 on October 2.

Prior to the drop, the Department of Energy estimated crude oil storage increased for the tenth straight week to 489,424 MBO – the second highest in history. The record of 490,912 MBO was set in April 2015, as companies continue to stockpile volumes in hopes of cashing in on any signs of a near-term price recovery. United States crude production for September 2015 (its latest information) is 9,326 MBOPD – just 259 MBOPD. The number is less than 3% below volumes from April – the month production finally rolled over.

The Organization of Petroleum Exporting Countries is scheduled to meet in Vienna at the end of the week to discuss the oil markets. Saudi Arabia, the de facto chief of the cartel, has given no implications that it will reduce its output. Russia is also pumping crude at full blast, setting another new record in November.

Meanwhile, the U.S. dollar reached a 12.5 year high following comments from the Federal Reserve about a potential rate hike before year-end. The monthly U.S. jobs report will be released on Friday, and USA Today says payroll gains would have to be “significantly below the 200,000 projected by analysts to even give Fed policymakers pause about pulling the trigger.”

 


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