Crude oil prices are back down to their lowest levels since August this afternoon on a variety of bearish headwinds. It all started earlier today when it was reported that while a majority of OPEC member countries would agree to cut crude oil production at this week’s meeting on Friday, Saudi Arabia and other Persian Gulf Arab countries would not support a cut in production. With the Saudis refusing to cut production seemingly regardless of price, it is unlikely that there will be any meaningful cut in output from OPEC.
As if that wasn’t bad enough, today’s inventory report from the Department of Energy (DoE) showed that crude oil inventories continue to pile up. In the latest weekly supply report, US crude oil stockpiles rose by 1.177 million barrels, which was nearly 2 million more than analysts were expecting. With that unexpected build, current stockpiles are now less than 1.5 million from an all-time high. Keep in mind, however, that stockpiles normally hit their highs in the Spring and at this time of year are usually 5% below their Spring highs. At current levels, US crude inventories are nearly 46% above their historical average for this time of year going back to 1983 and 42% above that average going back ten years.