Crude oil prices dropped for a fifth straight day today, and the culprit this time around was a surprisingly large build in crude oil inventories. While traders were expecting stockpiles to decline by 2.25 million barrels, they actually increased by nearly 1.7 million barrels. As shown in the charts below, this week’s build comes at a time when stockpiles are typically in decline, although we would note that with a record nine straight weeks of inventory drawdowns, we were due for an increase. That being said, crude oil stockpiles are currently 51% above average for this time of year and with rig counts increasing, that has put some downward pressure on prices.
The pressure on prices has been especially strong in recent days. The pace of declines in crude oil has picked up steam this week, and at a current level of $41.77 is less than $1 from falling into bear market territory (20% decline from closing high of 51.23 back on 6/9).