Oil prices falling because of U.S. production, Canada imports
Analysts said that a crude-oil glut from increasing domestic production and imports from Canada helped drive U.S. oil prices below $100. They added that a change in the flow of a key U.S. oil pipeline that begins this week could help reduce retail gasoline prices.
The U.S. Energy Department says that crude oil inventories at a storage hub in Cushing, Okla., reached a record 45.1 million barrels on May 11, breaking the old record of 41.9 million barrels set in early April 2011.
The Energy Department also said that last year the supplies at Cushing peaked in April and “generally declined slowly for the rest of the year.” That’s not happening this year, the Energy Department said, as the amount of crude at Cushing has continued to build.
Analysts have frequently referred to the Cushing storage hub crude as “landlocked,” a misnomer that refers more to the fact that there have been few transport pipelines that could move that crude to the high concentration of U.S. oil refineries near the Gulf of Mexico, said Phil Flynn, an oil analyst for PFGBest Research in Chicago.
That situation may finally begin to change this week when the so-called Seaway pipeline that runs from the Houston area to Cushing has its flow reversed, Flynn said.
“We’ll have more crude down in the gulf area where it can be processed, and that should keep a downward pressure on U.S. gasoline prices,” Flynn said.
U.S. exports of refined products, such as diesel fuel, remain high, although they have dropped below the peak set in late February and early March.
So far today, U.S. crude oil prices have rebounded slightly, up 64 cents to $93.45 a barrel on the New York Mercantile Exchange. The closing price Wednesday of $92.81 a barrel was the lowest since Nov. 2.
Brent oil, which is used to price most U.S. oil imports, was falling, down 32 cents to $109.43 on the ICE Futures Europe Exchange in London.
In the U.S., retail gasoline prices continued to creep lower. The national average for a gallon of regular gasoline fell 0.6 cents overnight to $3.722 a gallon. In California, gasoline prices were unchanged since last night at $4.366 a gallon.
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