Oil prices rose in early Asian trading on Thursday, shrugging off a smaller than expected decline in USA stockpiles as the market waited with bated breath for the result of Britain’s “Brexit” vote. S, crude oil for August delivery settled 72 cents down or by 1.4 percent $49.13 per barrel.
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The sentiment in the crude oil market reversed after the disappointing inventory report released on Wednesday.
Crude stockpiles declined to 530.6 million barrels in the week ended June 17, according to the EIA report. EIA reported stockpiles dropped by 917,000, far less than the 5.2 million barrels reported by the industry’s American Petroleum Institute. The rise in USA imports shows “a wave of crude oil coming back to the United States potentially swamping the market again”.
Other signs include lower US shale oil production due to reduced investment in the wake of the price collapse, underpinning a wider drop in non-OPEC supply in 2016.
The drop in US crude inventories, if confirmed by the DOE figures at 1430 GMT, would be the fifth straight weekly decline and adds to signs that a supply glut which has halved oil prices in the last two years is easing. USA crude supplies increased in 24 of the 30 weeks from September to March, although in recent weeks stocks have started to level off and decline as US producers have cut production in light of depressed prices.
Imports of oil jumped by 817,000 barrels per day from the previous week’s level.
“Although gasoline demand is still strong relative to year-ago levels, a build to both gasoline and distillate inventories does not bode well for product prices either”. The U.S. dollar’s moves help determine demand for oil among holders of other currencies.
“Expectations got a little inflated because of the number that was posted by the API”.
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Apart from Brexit, investors will also be monitoring whether US rig count has risen for the fourth straight week. Crude in NY has advanced nearly 90 percent from the lowest level in 12 years in February as disruptions from Nigeria to Canada and falling output in the US eased a global surplus.
