Oil just had its first weekly decline in a month, breaking a rally in crude prices. A bit of context: After what’s happened over the last year, “rally” seems a bit of an overstatement. One big factor that may be driving prices down this week: The U.S. is pumping so much oil it’s running out of places to stash it.
Crude oil in storage in the U.S. has jumped to the highest levels in at least 80 years, according to a Bloomberg Industries analysis. The EIA this week reported that U.S. inventories rose 7.7 million barrels to 425.6 million. That’s more than 20 percent higher than the five-year average.
The buildup of supply has been “colossal” and is responsible for oil prices falling this week, Thomas Finlon, director of Energy Analytics Group LLC, told Bloomberg News. Winter weather and refinery outages have contributed to the supply glut. Even when those conditions subside, topped-out inventories and continued production growth may continue to suppress oil prices for the near- and medium-term, according to Bloomberg Industries. Meanwhile, the U.S. is pumping oil at a faster pace than any time since 1972.