Crude oil supplies at 23-year low

NEW YORK (Feb. 2, 2000) — U.S. crude oil inventories fell a greater-than-expected 10.4 million barrels, or 3.6%, to 281.17 million barrels through Jan. 28, leaving crude oil supplies at their lowest level since August 1976.

The drop in crude oil inventories came as imports fell and refinery demand rose. Imports dropped 13%, to 7.2 million barrels a day, close to a 22-month low reached two weeks earlier, according to the American Petroleum Institute.

New York (NYMEX) crude oil futures reached a nine-year high of $29.95 a barrel last month, spurred by oil production cutbacks from the Organization of Petroleum Exporting Countries (OPEC) and other producers, and by winter demand for heating oil. The cuts were a response to the 1998 fall of oil prices to 12-year lows. The price dipped to under $10 per barrel due to a supply glut in 1998.

The current soaring oil price has stung the trucking industry, for which fuel is typically the No. 2 operating cost behind wages. There is hope that OPEC will ease production restraints when it meets on March 31.

Market action today will be driven by whether another release of weekly inventory data confirms expectations that distillate stocks fell sharply last week.