The U.S. Energy Information Administration said oil inventories swelled 5.5 million barrels and crude prices descended $1.10 to $53.10 a barrel in the process. Brent crude also saw a big drop of $1.06 a barrel to $53.08 a barrel.
Oil imports flooded the U.S. marking the third highest average of 10.9 million barrels a day.
This could bode well for consumers although prices at the pump still average over $2.20 a gallon as the summer travel season closes in.
Some conflict exists over opinions on oil inventory right now. The Saudis say they believe oil inventories are adequate but they said on last Monday’s meeting that they would supply what is wanted.
Iranians suggested Tuesday however, that there might be too much oil on the market.
A number of refineries have seen down time for unscheduled maintenance issue and ConocoPhillips is down again this week with maintenance problems. OPEC has suggested these refinery issues are one of the big reasons gas prices are so high right now.
Earlier this month, OPEC said that inventories for crude are certainly high enough for the market but oil gets bottlenecked at refineries in countries with large consumption rates.
President Bush will request today that defunct military bases be turned into oil refineries but this would be a long-term answer instead of a short-term fix. He also included tax breaks and incentives for the development of fuel cells and hybrid vehicles.
The U.S. hasn’t seen a new oil refinery in over 30 years.
John Stith is a staff writer for Murdok covering technology and business.
