US crude prices fell on Tuesday, hitting three-month lows, as worries over a gasoline glut outweighed expectations of USA crude stock declines, while Brent erased early losses to settle higher due to its better fundamentals versus US crude. USA oil explorers have boosted the number of active rigs by 55 since the start of June to 371, with 14 added last week, Baker Hughes Inc. said Friday.
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The U.S. Energy Information Administration (EIA) said crude stockpiles rose 1.7 million barrels last week, instead of falling 2.3 million barrels as forecast.
Brent crude is still up more than 60 percent from a 12-year low near $27 in January, but the rally has petered out on signs that the supply glut will persist and as economic jitters raised concern about the strength of oil demand.
Worldwide oil price benchmark Brent crude dipped back towards $44 a barrel this morning in London, less than a dollar above its 9 May low. For more on crude oil prices, read the previous part of the series.
With energy prices continuing their slide since 2014, these companies have highly relied on their so-called downstream businesses that include crude refining units turning crude into gasoline and also in their other activities like oil trading and gas stations. WTI was trading settled a half percent lower at $42.92 per barrel Tuesday, after breaking below its 100-day moving average of $44.25 on Monday.
Futures extended declines from the settlement after the industry-funded American Petroleum Institute was said to report crude supplies at Cushing, Oklahoma, the nation’s biggest storage site and the delivery for WTI, rose 1.38 million barrels last week.
“We will likely break through the $40 levels in days and weeks to come”, said Tariq Zahir, crude trader and portfolio manager at Tyche Capital Advisors in NY. The supply of petrol had surged up during the peak season for demand in the US.
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“There strategic petroleum reserve is absolutely full at about 700 million barrels and they have the highest inventory of crude oil they’ve had in 86 years”, he said. Hedge funds’ net-long position fell by 23,665 futures and options combined to 156,804 in the week ended July 19, CFTC data showed. During the session, WTI fell to as low as $42.36 earlier, its lowest since April 20.
