A surprise rise in U.S. oil inventories sent the market tanking when the Department of Energy released its weekly update on Wednesday. Oil had its biggest one-day loss since March, falling to a one-month low near $45 per barrel.
U.S. stockpiles of crude oil, gasoline, and diesel fuel are at historically high levels, which is keeping a lid on fuel prices, even as other global producers are reducing oil output. OPEC nations and Russia have largely been holding to their promise to reduce production, but U.S. producers have been drilling more wells over the last 5 months, replacing foreign oil with domestic crude.
This has helped to keep energy prices relatively affordable for consumers, with retail gasoline under $2.50 per gallon for most Americans over past two years.
British Election Turmoil for Tories
In April, British Prime Minister Theresa May called for a snap election to shore up support for her Conservative Party in Parliament. May has been leading Great Britain since the Brexit vote last June and had been expected to gain a mandate in this week’s election.
Instead, her party lost seats and control of Parliament, which may derail May’s bargaining position domestically and with the EU as Great Britain negotiates its exit from the EU.
Market watchers reacted swiftly to the election results, dumping the British pound as they feared a “hard Brexit” with harsher terms from the EU, knocking the pound near a two-month low at $1.27 early Friday morning.
USDA Projects Healthy Harvest
On Friday morning, the USDA updated its monthly Supply & Demand and Crop Production reports, showing continued projections for ample corn, wheat, and soybean crops this year.
The USDA raised its estimates of grain stockpiles as well, which could continue to put pressure on prices in the coming months, although weather concerns will continue to dominate these markets.
As of midday Friday, July Kansas City wheat was worth $4.55 per bushel, July soybeans stood at $9.40, and July corn carried a value of $3.88.