The price per barrel of West Texas Intermediate crude oil has risen as much as 56% since its 2018 decline, which bottomed out at $42.53 per barrel on Dec. 24. Producers increased production as the higher price made doing so relatively more profitable. However, they might have gone too far as oil refinery inventories appear to overrun demand. As of May 31, the U.S. Energy Information Administration reported its days-of-supply figure, or how many days their current inventory can meet demand before running out, at 28.9 days, its highest mark since Oct. 6, 2017.
Chief among the causes of this most recent decline in oil is the overall concern about global growth because crude still plays a prime role in the global economy. Worries about global growth stem from trade tensions between the U.S. and China as retaliatory tariffs between the two would ultimately lead to less trade between the two countries — trade in which crude plays a central role — moving goods back and forth.
The U.S. Department of Energy recently reported that as of the end of May, U.S. crude production reached a record 12.4 millions barrels per day, up from about 10.9 million barrels 12 months earlier.