Oil and gas prices have plunged to their lowest levels of 2010 this week after the government reported a glut of supplies. The hoped-for demand spike never materialized, which may ding energy exchange traded funds (ETFs).
The oil rally in recent weeks was underpinned by the assumption that the extreme cold weather would increase demand for heating and drain inventories, writes David Parkinson for The Globe and Mail. Wall Street expected a 1.9 million barrel drop in inventories, but the supply actually grew by 3.7 million barrels. Gas supplies surged by 3.8 million barrels.
The recent developments naturally have a lot of investors and energy traders re-evaluating their thoughts about the underlying demand.
Oil prices have been hovering around $80 a barrel. However, long-term forces will likely keep oil prices high, comments Sean Brodrick for Uncommon Wisdom. Mexico oil exports are down 14% year-over-year, Venezuela oil exports are down 9% year-over-year and Saudi Arabian oil exports are also down 12% year-over-year. [Energy comeback in 2010?]