Brimming U.S. Crude Supplies Fail to Dampen Price

U.S. crude oil supplies have bloated to the highest levels in six years — but in the face of an 8 percent jump in U.S. demand since 1999, don’t expect oil prices to fall to the $20 per barrel seen back then, experts said on Friday.

Since March, the United States has received bountiful boatloads of crude from Saudi Arabia. The world’s largest oil producer has proffered oil to the world’s largest consumer to head off a supply crimp in the coming high demand winter heating season.

That has pushed U.S. oil supplies to 327 million barrels, the highest level since energy companies were hoarding oil in fear of a global computer meltdown in 2000, according to the federal Energy Information Administration.

And a steep contango, where later-month futures prices are more expensive than the current-month price, has oil companies buying even more oil and wishing they had more storage to stash it and sell it later at a higher price.
Reuters