Crude oil has been sticking out as a kind of poster child for the entire commodities debacle recently. In New York on Wednesday, oil fell to $93.10 (U.S.) a barrel, down 88 cents – hitting a six-month low and marking its 10th decline in 11 trading sessions. Since February alone, the price has slid 15.4 per cent.
There are broad issues weighing on oil, from uncertainty about what a Greek withdrawal from the euro zone would do to the European economy to fear about slowing economic growth in China. But for an example of something far more real than mere fears and uncertainty, take a look at U.S. crude oil inventories: They’re rising, suggesting that the U.S. thirst for energy might be in decline.
Inventories for the period ended last week grew by 2.1 million barrels, up 0.6 per cent and well ahead of expectations for a more moderate increase. As Bespoke Investment Group pointed out, the gain marks the eighth straight week in which inventories have risen more than expected – and for this time of year you would have to go way back to 1990 to find a period in which inventories were higher than they are now.
“On a seasonal basis, the current week is when crude oil inventories typically hit their highs for the year, so it will be interesting to see if inventories start to decline in the weeks ahead,” Bespoke said.
Meanwhile, Canadian energy stocks are suffering along with the underlying commodity. The S&P/TSX energy subindex on Tuesday hit its lowest level since October. Suncor Energy Inc. has slumped about 25 per cent since February.