Crude Declines on Cushing Oil Glut

[Elmore Furth]

Supply and demand rear their ugly heads.

NEW YORK—Crude-oil futures dropped, as the front-month contract comes under increasing pressure from a developing surplus at its delivery point in Cushing, Okla.

Light, sweet crude for June delivery traded $1.24, or 1.5%, lower at $82.44 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 86 cents, or 1%, lower at $84.84 a barrel.

Oil inventories at Cushing reached 34.1 million barrels in the week ended April 16, less than one million barrels shy of a record, the U.S. Energy Information Administration said Wednesday. The extra oil has few outlets, with stockpiles across the Midwest at their highest in at least 20 years and refiners already producing enough fuel to further inflate gasoline and distillate inventories.

The oil market is preparing for an extended surplus at the delivery point for physical barrels tied to the crude futures contract. However, many traders are still expecting supplies to tighten later this year as the economic recovery lifts demand. As a result, oil for delivery in the next month, when supplies are expected to be high, is trading at an increasingly steep discount to oil for later delivery. Recently, June crude futures traded at a $2.18 discount to the July contract, the widest gap between the two front months since Dec. 15.



Crude Declines on Cushing Oil Glut

[notadmblnd]

1. I'll bet it hasn't gone down one penny at the pump. Yesterdays price here 2.82

[daggahead]

2. I paid $2.97/gallon at the pump this morning.

Must be because of that oil rig fire. Or maybe a gasoline delivery truck had a flat tire somewhere in Texas.

[icnorth]

6. My guess is the flat tire on the

delivery truck, either that or a power outage at a marina fuel pump in Naples Fla.

[louis-t]

3. And the report tomorrow will be...

'Crude Trading Higher As Inventory Tightens'. Wholesale manipulation.

[upi402]

4. $3 a gallon here, wonder what's up... n/t

[northernlights]

5. speculation

that the "recovery" will drive up demand.

when the "recovery" doesn't materialize, in that it exists only in computer blips between banksters and doesn't involve actual decent-paying jobs and real "consumer demand" with hordes of people actually driving and flying around on vacation this summer, then reality will catch up and prices will drop.

That said, locally traffic is seriously up in the past couple weeks. Not to summer tourist levels here, but still significant enough that I have to allow a few extra minutes to get to work.