Oil prices had climbed 43 percent from a five-year low of $33.87 a barrel on fears that the conflict between Israel and Hamas in Gaza could spread to the rest of oil-rich Middle East and affect supplies. Today, however, energy prices tumbled across the board after a government report showed U.S. oil reserves were much greater than expected.
According to the Energy Information Administration, inventories rose 6.7 million barrels, well past the 1.5 million-barrel build expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. Analyst Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said it was one of the more bearish EIA reports he’s seen in a while.
Commenting on the recent rally in oil prices, Ritterbusch said, “It didn’t have a lot of fundamental impetus behind it, and now we’re getting evidence that there’s a lot more crude and product supply out there than what we thought.”
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