Crude Oil continues to slide owing to high inventory & oversupply

Posted By on May 18, 2010

unleadedgasvdollar1yr100518Oil is ‘cheap’ according to graphs depicting Unleaded Gasoline against the dollar this past year (right) and crude oil over the past two years (below). The crisis in Europe and lack of robust economic recovery worldwide is contributing to high inventories and the faltering Spring rally in oil. Lackluster demand aside, oil production countries remain slow to lower production, crudevdollar08to10contributing to higher inventory and weakening prices. According to a WSJ article, “the market is again testing OPEC’s tolerance for a price slide.” June crude futures have slide 21%, ($18/ barrel) since the beginning of May after optimism that economies worldwide were on the mend.  Oil peaked at $87.15 a barrel on May 3rd and has been sliding since closing at $69.41 for June deliveries on the New Mercantile Exchange. Although a rally started the day, the reality of high stockpiles dampened the early bullish sentiment.



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