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Crude Oil's Robust Rally Likely To Fade With Surging Inventories

By Sumit Roy

Oil stockpiles continue to hit record levels.

The Department of Energy reported this morning that in the week ending Jan. 30, U.S. crude oil inventories increased by 6.3 million barrels, gasoline inventories increased by 2.3 million barrels, distillate inventories increased by 1.8 million barrels and total petroleum inventories increased by 12.1 million barrels.

Crude oil sold off following the release of the latest inventory figures. Despite today's decline, crude prices are up sharply from the six-year lows set last month. On Tuesday, Brent and WTI reached as high as $59 and $54.24, respectively, up from lows of $45.19 and $43.58. That's a sizzling rally of nearly 31 percent for Brent and 25 percent for WTI.

BRENT

WTI

The latest rally is directly tied to the steep fall in the number of rigs drilling for oil in the U.S. Traders are speculating that reduced drilling will ultimately lead… Read More …