But again, experts suggest the selloff is unjustified: File Image/Pixabay
The familiar spectacle of analytical forecasts of crude inventory volumes proving to be wildly off the mark served on Wednesday to continue the commodity's price plunge, with the Energy Information Agency reporting that U.S. crude inventories rose 6.8 million barrels last week compared with expectations for an 849,000 barrel drawdown.
This is the highest level crude has reached in storage since July 2017 and about 6 percent above the five year average for this time of year - and the disclosure caused traders already fearful of weakening demand and worsening global economics to send Brent plummeting $1.31 to $60.66 per barrel.
West Texas Intermediate on Wednesday hit a low of $50.60 per barrel, its weakest showing since January 14, before settling at $51.68 - a 3.4 percent drop.
John Kilduff, founding partner, Again Capital
Really $50 is legitimate support zone [for WTI]
John Kilduff, founding partner of Again Capital, told media that "Really $50 is legitimate support zone [for WTI] because we had a hard time getting up and through that on the rally through December.
"So that's going to be the next level to watch."
The inventory builds were said to be caused by U.S. crude imports rising last week by 1.1 million barrels per day (bpd), while crude production added another 100,000 bpd to a new peak at 12.4 million bpd.
Experts think the most immediate possibility of relief for depressed crude prices is the Organization of the Petroleum Exporting Countries (OPEC), which will convene later this month or early in July to decide if their output cuts should be extended to the end of 2019.
However, it's anyone's guess whether OPEC allies will be amenable to extending the cuts given their impact on their own economies: Russia has repeatedly signaled that it wants to pump all out, and the latest signal it is heading in that direction came from three different sources, who told Reuters that output at Kazakhstan's Kashagan field reached an all-time high of 400,000 bpd on Tuesday.
Still, despite the hand wringing and warnings from the analytical community, the jury is still out as to whether demand will decline in the near future - indeed, Denton Cinquegrana, chief oil analyst at OPIS, reminded CNBC television that demand will pick up this summer due to the annual increase in holiday motorists.
It's also worth noting the EIA data that never fails to confound analytical expectations usually comes at a time when experts are fretting over the prospect of a crude inventory tightening, most recently in the form of radically slashed exports from Iran and Venezuela - both countries of which were conspicuously absent in Wednesday's debate of the state of the market.