Surprise inventory Build Seizes the Relentlessly Escalating Crude Oil Prices in the USA, Ripples Felt in Europe
- 28-Oct-2021 6:40 PM
- Journalist: Patricia Jose Perez
The crude oil inventories, in the USA, capped off the third week closing with unforeseen gains of around 2.3 million barrels reversing the sky-rocketing oil prices in the country on Wednesday. The price of Brent oil on Wednesday was recorded to be USD 85.12 per barrel after registering a degradation of 1.42% from the price recorded on Tuesday.
As per the American Petroleum Institute data, the stockpiles of gasoline and distillates also showed an increase of 530,000 barrels 986,000 barrels respectively. The higher stockpiles were realised at the largest crude oil storage capacity of the world, NYMEX delivery point of Cushing, Oklahoma, accountable for 16% of the total USA crude oil capacity.
The prices of crude oil were seen to drop in Europe as well, following the rise in USA crude oil stockpiles. The ICE Brent oil futures contract settled at USD 1.15 per barrel after showing a decline of 1.33%.
Crude oil is a mix of liquid hydrocarbons and is extracted from underground reservoirs by the drilling process. The refining of extracted crude oil is performed to obtain products like gasoline, diesel, heating oil, and other important petrochemical products which are used in heating, generating electricity, transportation, and producing performance chemicals like plastics.
As per ChemAnalyst, crude oil consumption in the USA stood at 18.12 million barrels per day in 2020 owing to weak demand in the pandemic period. With rebounding industrial activities in 2021 the demand for crude oil remained firm while the production received a major setback in the form of disruptions to the three-fourth oil facilities at the Gulf of Mexico after being hit by the Ida hurricane in late August. Since then, the crude oil prices in the USA have been breaking records following tight supplies. The surprise stockpiles increase is a big relief amid the ongoing crude oil crisis in the USA and the other parts of the world which are also echoing the higher price trends. The fall in oil prices is expected to reflect in various refinery products marketed to the consumers.