Crude Prices Under Downward Pressure
Crude oil prices are down 3.1% week, after climbing 6.7% the week before. There are several reasons for the downward pressure which has pushed crude to the mid-50s level this week. First, there was the surprise buildup in U.S. crude stockpiles of 2.4 million barrels last week, marking back-to-back surpluses. Second, Saudi Arabia has managed to restore its oil production faster than expected, after a key oil refinery was damaged earlier this month, which sent oil prices surging higher. On Friday, China reported a drop in industrial profits in August, which has raised concerns that the Chinese economy continues to slow down. China is the world’s second-largest consumer of oil, so oil prices are sensitive to Chinese economic releases. We’re unlikely to see much movement from crude for the remainder of the day.
