Nothing Is Going Oil's Way

Wednesday was another bad day at the office for oil, which tumbled in face of bearish inventories data. The Federal Reserve also provided no help to oil's cause. NYMEX-traded crude for July delivery fell $2.23 to $81.80 a barrel. That's the lowest settlement price for the U.S. benchmark contract since early October. In London, Brent crude for August delivery slid $3.07, or 3.2 percent, to $92.69 a barrel. That's the lowest settlement for the global benchmark contract since December 2011. The PowerShares DB US Dollar Index Bullish (NYSE: UUP) also closed modestly higher today, suppressing oil in its wake. The Energy Department said U.S. oil inventories climbed by 2.86 million barrels to 387.3 million last week. That's the first increase in several weeks and well above the decline of 1.3 million barrels analysts expected. U.S. oil inventories now rest at their highest levels since the summer of 1990.

U.S. crude production climbed 117,000 barrels a day to 6.35 million in the week ended June 15, the highest level since February 1999, according to Bloomberg. Crude imports increased 328,000 barrels a day to 9.45 million last week, the highest level since March, Bloomberg reported.

In other oil news, the federal government raised $1.7 billion in a Gulf of Mexico oil auction. Believe it or not, barely more than two years removed from the Gulf of Mexico spill BP (NYSE: BP) was the highest bidder on 43 leases. BP, Europe's second-largest oil company, is the largest leaseholder in the Gulf. The Gulf spill was the worst spill in U.S. history.

According to the Interior Department, Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), Apache (NYSE: APA) and Noble Energy (NYSE: NBL) were among the largest bidders.

Leases in waters deeper than 1,600 meters (5,250 feet) accounted for more than 53 percent of all the high bids, or $906 million, and almost 10 times more than tracts in water 400 meters or shallower, Bloomberg reported, citing the Interior Department.

Looking at global oil developments, the Colombian Oil Association said today that the international oil industry will invest $120 billion in Colombia over the next decade. Colombia, South America's third-largest economy, is also the continent's third-largest oil producer behind OPEC member Venezuela and Brazil. Colombia is hoping to be pumping 1 million barrels per day by the end of this year.

Of the expected $120 billion in investment, the Colombian Oil Association expects $50 billion of that to be devoted to exploration and production with the rest going to refining and transportation operations.