US inventories hit record highs, oil investment tumbles

Crude oil prices fell on global cues today, losing nearly 1% on the charts, as the US Department of Energy reported their highest inventory numbers since the fall of 1990. The news shook the confidence of traders, causing oil investment to tumble down the polls.

Economists have stated that they are in the midst of awaiting further reports detailing the state of the economy in the US. Investments in crude oil have sparked lately, with traders buying up the high risk commodity in anticipation of strong rebounds in the second quarter of the year. However, this most recent blow will likely drive some away, as the sector tries to turn to other niche factors to make up for oversupplying.

West Texas Intermediate crude futures for delivery in June lost 94 cents, settling at $105.22 per barrel in New York trading. Though investments in the benchmark carried it over the $106 level, as predicted, it is having a tough time hovering over the notorious $105 per barrel mark.

With Spain declaring its economy to be back in recession, and the French elections hovering on the horizons, it would appear that peak oil investment time is coming to a close. The market still has a second bottom in the face of turmoil in the Middle East, yet that bottom is waning far too rapidly to sustain long term recovery for the product.

The perpetually rising inventories of the fuel on the domestic front remain a glaring issue. As it stands now, Cushing, Oklahoma, the main hub of crude storage in the US, holds over 43 million barrels, a worryingly large number for investments.

By: Chris Termeer