In a notable downturn, the price of West Texas Intermediate (WTI) crude oil closed on Wednesday with a decline of 3.6%, reaching $79 per barrel, marking its lowest level in the past seven weeks.
At the close of trading on the New York Mercantile Exchange (Nymex), WTI futures contracts set for June delivery fell by $2.70 from the previous day’s close.
Analysts attribute this downturn to an increase in commercial crude oil inventories due to subdued demand. In fact, last week’s total inventories soared to 461 million barrels, the highest since June 2023, as reported by the Energy Information Administration (EIA).
Refineries’ crude oil processing rate decreased to 87.5%, influenced by a decline in daily gasoline demand, which stood at 8.5 million barrels last week, representing a 1.3% decrease from the same period last year.
“The refineries are completely failing to keep up with the operational rate, and this is because they believe there is no demand,” explained Mizuho Yawger, an analyst and the director of the energy futures division at Mizuho Americas, in comments reported by CNBC.
In other markets, natural gas futures for June delivery also experienced a downturn, falling by 3.06% to $1.93 per thousand cubic feet.