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by Stockwatch Business Reporter
West Texas Intermediate crude for July delivery tumbled $3.26 to $36.34 on the New York Merc, while Brent for August lost $3.18 to $38.55 (all figures in this para U.S.). Western Canadian Select traded at a discount of $8.39 to WTI, down from a discount of $8.32. Natural gas for July added three cents to $1.81. The TSX energy index plunged 8.62 points to close at 79.15.
Oil prices beat a painful retreat after U.S. crude inventories reached record highs and the U.S. Federal Reserve took a longer-term stance in forecasting an economic recovery. Data from the U.S. Energy Information Administration (EIA) showed a continuing deluge of Saudi barrels into the Gulf Coast market. A lot of these barrels would have been placed on tankers when Saudi Arabia was still in its price war with Russia and was deliberately flooding the market with cheap oil in order to seize market share. In April, for example, Saudi Arabia sent no fewer than 18 supertankers to the Gulf of Mexico; the usual number is seven. The price war may be over now, but the tankers are still busily offloading crude, and inventories are swelling as refiners contend with sluggish demand. Meanwhile, Fed chairman Jerome Powell struck a bearish chord yesterday as he vowed to "keep interest rates near zero for years," while warning Americans of a long road to economic recovery. "[There could be] well into the millions of people who don't get back to their old jobs," he said, adding that some people may not be able to find jobs for years.
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