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Oil Glut Causing Prices to Dive

by Elizabeth Alford on July 27, 2015

The roller coaster continues in the oil and gas industry as crude takes another dive throughout July.

After rising slightly in the spring, crude began to decline again in July and hit a new low today with Nasdaq reporting WTI at $47.36 by midday. Analysts blame the price drop on the crude glut that is continuing to mount.

Last week, the EIA Energy Information Administration reported that crude oil inventories rose by 2.5 MMbbls for the week ending July 17, 2015 and the market responded with a drop in crude prices. Data highlights include:

  • – U.S. refineries were running at more than 95% of capacity again last week with daily input of about 16.9 million barrels a day, about 45,000 barrels a day more than the previous week
  • – Refiners boosted throughput by 250,000 barrels a day over the past two weeks
  • – Imports increased last week to around 7.9 million barrels a day, about 500,000 barrels a day more than the prior week

There is also a great deal of speculation and uncertainty about how lifting sanctions on Iran might impact the United States.

The drop in oil prices corresponds with a rise in the overall rig counts, which increased by 21 last week to  659 for oil rigs across the U.S.. This is still half as many as last year is half form 1,562 a year ago, but represents the biggest increase this year.

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