t's been a volatile week for oil prices and for oil-supplies data. In the U.S., West Texas intermediate crude prices plummeted 4.2% Wednesday, after weekly oil stockpiles surged by 2.4 million barrels, while analysts had projected a 1.3 million barrel decline. Europe's Brent crude benchmark dropped 2.1%, trading down a bit more than 1% so far for the week.
Oil, which is globally priced in dollars, came under some pressure during the week as the Greek crisis hurt the euro and the dollar rose. That made oil more expensive relative to other currencies. But a number of other critical international factors were also in play.
Researcher Genscape reported Monday that stockpiles at Europe's ARA (Amsterdam, Rotterdam, Antwerp) oil trading hub climbed above 60 million barrels — the highest number since record-keeping began in 2013.
That news helped pressure WTI down 2.1% and Brent to a 1.9% loss on Monday.
On Tuesday, official data out of China showed that oil demand surged more than 8% in May. That put China's average monthly oil demand comfortably above 10 million barrels per day so far this year, and at its fastest pace of growth since 2011, according to Platts, a research firm. The country remained a new oil exporter, with production up 1.7%. WTI rebounded to a 2% gain. Brent jumped 2.5%.
Wednesday's tumble appeared to owe mainly to the EIA data. But other key news was that Iran was reworking the contracts through which it deals with multinational oil companies, looking to draw $100 billion in investment when and if international nuclear sanctions are lifted, according to the Financial Times.
U.S. oil companies exited Iran in 1979. Shell (NYSE:RDSA), Total (NYSE:TOT), Statoil (NYSE:STO) and Eni (NYSE:E) produce oil there, but have refused to develop new capacity, the Times reported, due to Iran's contract limitations. But the country, which holds the world's second largest natural gas reserves and fourth largest cache of oil, is one of the few places remaining where large-scale fields of conventional reserves remain undeveloped.
On June 15, Reuters reported that Iran had 40 million barrels of sanctions-blocked oil stored off its coast in state-owned supertankers. Experts expect the country to push hard to sell that stockpile, if sanctions are lifted, to re-establish market share.