Oil prices fell, pressured by a stronger dollar and as a surprise increase in USA crude inventories suggested supply remains ample despite output problems.
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The US Federal Reserve on Wednesday gave a shot-in-the-arm to an already strong dollar by signalling the possibility of a hike in interest rate in June, buoying the stock markets in the process.
Nearly 2.5 million barrels a day of supplies have been removed from the oil market this year because of outages from Canada to Nigeria, with a lot of them occurring over the past month, ANZ analyst Daniel Hynes wrote in a report dated May 19.
USA crude oil stockpiles rose unexpectedly last week even as gasoline and distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday. In April, Saudi Arabia pumped 10.125 million barrels per day, according to OPEC’s Monthly Oil Report, down slightly from March’s daily average of 10.133 million bpd.
West Texas Intermediate oil for June delivery slipped 12 cents to settle at $48.19 a barrel on the New York Mercantile Exchange.
However, due to the released minutes from the meeting on Central Bank’s policy in April, International Brent crude has already fallen down to $48.80 a barrel, down by about 46 cents, although it was previously – clocking at intraday high of $49.80 – already beating its highest since November of previous year.
Crude oil continues trading near six-month highs on supply disruptions from Nigeria, Libya and Canada, where an out-of-control wildfire has burned an area larger than the size of Rhode Island and has extended the closure of oil sands production.
Since oil is traded in dollar, a stronger greenback makes fuel purchases for countries that use other currencies more expensive, potentially denting demand.
Below, we chart the seasonality of crude oil inventory changes since 1994.
Oil prices fell early on Thursday, pulled down by rising United States crude inventories, a stronger dollar and surging output from Iran to Europe and Asia. According to the U.S. Inventories fell by 1.14 million barrels last week, the American Petroleum Institute was said to report. Has the rebalancing of the market really begun?
Even as late as Wednesday afternoon, Brent, the global benchmark, was lumbering steadily towards $50 a barrel, a level unseen since November. Oil prices used a late rally to almost erase all of its losses from earlier in the session.
July WTI CLN6, which will be the front-month contract from Friday, settled 11 cents lower at $48.67.
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Despite the recent rally in crude price, the global price of oil has fallen more than 55% since peaking at $115 a barrel in June, 2014.
