Oil Price Hits lowest Since April At $44.65/Barrel

Oil prices dropped on Monday, July 25, with U.S. crude plunging to a 3-month low on rising concerns that a global glut of crude and refined products would put markets under intense pressure.

Brent crude futures were trading at $44.65 a barrel by 4;25 p.m ET, down $1.04 cents or 2.28 percent from their previous close. The contract fell to an intraday low of $44.55, a low going back to May 10.

U.S. crude settled down $1.06, or 2.4 percent, at $43.13 a barrel and was last down $1.14, or 2.58 percent, at $43.05 a barrel, having earlier touch $42.97, their lowest level since April 26. The settle marked the lowest since April 25, when oil settled at $42.64 per barrel.

According to data from market intelligence firm Genscape, there is an inventory rise of 1.1 million barrels at the Cushing, Oklahoma delivery base for U.S. crude futures in the week to July 22, said traders who saw the numbers.

Investors have become less optimistic that markets will balance quickly amid a massive overhang in refined products, particularly gasoline, despite forecasts for record U.S. summer driving.

“We’ve got gasoline stocks that are through the roof  and you have the specter of turnaround season not too far in the horizon,” Robert Yawger, senior vice president of energy futures at Mizuho Securities USA said.

The threat of resurgent U.S. oil production with the rise of drilling rigs and a strong dollar added to the gloomy sentiment in the market, traders and brokers said.

The decline in U.S. output has been key to balancing a market that has been grappling with excess crude for nearly two years, but with prices recovering from 12-year lows, signs of drilling activity have re-emerged.

U.S. drillers added oil rigs for a fourth consecutive week, according to last week’s data from a closely followed report by energy services firm Baker Hughes.