Although the annual consumption of crude oil in August are the peak season, but in August this year, crude oil prices not only did not show strong seasonal rally, but fell sharply. New York, September crude oil futures prices fell in the 12 trading days of the nine U.S. dollars / barrel as much as a fall of 11%. Why the international crude oil market out of anti-seasonal?

U.S. stocks hit new record high of 20 years

According to the U.S. Department of Energy (EIA) data released last week showed that as at August 13 week, U.S. commercial crude oil inventories fell 81.8 million barrels to 3.542 million barrels; gasoline inventories decreased by 4 million barrels to 223.3 million barrels; but including including diesel and heating oil distillate stocks increased 107 million barrels, to 174.2 million barrels. Thus, U.S. stocks of crude oil and oil products up to 11.3 million barrels, a record high since 1990. If you count the strategic oil reserves, then the U.S. inventory of all crude oil and refined oil as high as 18.57 billion barrels. High crude oil prices pressured stocks, oil prices a major correction.

Ample spare capacity worldwide

So, why the U.S. crude oil inventories continue to increase? According to the International Energy Agency (IEA) report, although this year’s global demand for crude oil increased by nearly 160 million barrels a day, but the growth in demand mainly from developing countries, developed countries, demand for crude oil has not increased. Moreover, faster growth in the global supply of crude oil, far exceeding the demand. OPEC countries, in particular, not only now in a state cut, but more spare capacity, at least more than 500 million barrels / day.

It is because of OPEC’s spare capacity, more over-supply of crude oil in the whole state. Thus making the whole including the United States crude oil stocks in OECD countries are at historic highs. Crude oil prices from late last year to now failed to sharp rise in the hillside is still the highest price, while copper, natural rubber prices have been near record high levels.

Substantially reduced refinery profits

OPEC spare capacity in more cases than the world oil market supply demand pattern are hard to change, crude oil stocks at a historic high. And this corresponds to the poor consumer. According to the U.S. Energy Department data from 2005 to 2009, the second and third quarter, gasoline crack spread are larger, in the past 5 years (2005-2009) in the second quarter’s average gasoline prices rose 0.18 U.S. dollars / gallon . But this year, in the second quarter of the crack spread is less than a year earlier, the second quarter of this year, the average U.S. gasoline prices rose only 0.07 U.S. dollars / gallon. Therefore, the crack spread in the case of smaller, lower gasoline prices increase, so will inhibit the rate of increase in crude oil prices. According to Credit Suisse, said in a report last week, the U.S. Gulf coast refineries last week’s refining margin fell 1.62 U.S. dollars per barrel, to 6.12 U.S. dollars. Reduced refinery profits, gasoline prices have gone up does not go up, it also inhibited the price of oil.

Economic recovery, oil pressure concerns

With the U.S. economy gradually lost momentum in the second quarter, the Fed believes that the speed of U.S. economic recovery may be slower than expected. August U.S. home builders confidence unexpectedly dropped the third consecutive month. The Labor Department announced last Thursday, the beginning of the previous week for unemployment benefits unexpectedly rose to a nine month high, the market worries about the economic recovery increased, pressure oil prices lower. U.S. Congressional Budget Office said that with the high unemployment rate and manufacturing slowdown hurt economic recovery, the U.S. economy will face more difficult challenges in the future.

In short, the surplus of crude oil under the conditions of poor consumer to increase oil stocks, sluggish economic data so that people become more concerned about economic recovery; coupled with a sharp rebound in the dollar index and crude oil price has fallen steadily. Difficult to really revive the economy in the future the context of lower crude oil price shocks is still a large probability events.

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