Societe Generale SA said it expects the current downward correction in oil prices will bottom out in the high-$30 range.
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Responding to an expected drop in demand, top exporter Saudi Arabia on Sunday slashed the September price for its light crude for Asian customers by $1.30 a barrel.
US crude inventories climbed 1.41 MMbbl to 522.5 MMbbl in the week ended July 29, leaving supplies at the highest seasonal level in decades, EIA data show.
But crude has stepped lower since then, amid more proof that USA inventories and non-US output continue to grow.As Barclays outlined in a note on Monday, oil demand remains weak this summer – a period when inventories usually fall. Brent crude was up 11 cents a barrel at $41.91 at 1121 GMT. From April to June, supply disruptions in the form of wild fires in Canada and outages in Nigeria may have helped support higher prices, but now the straight up fundamentals are pressuring prices once again.
Last week, a Reuters survey showed that OPEC’s oil production in July is likely to reach its highest in recent history. Gasoline production inched down to 10 million bpd, and distillate output rose to 4.9 million bpd. According to the report, during the previous week crude inventories increased by 1.67 million barrels and gasoline inventories increased 452,000 barrels.
Oil rose in NY amid a weaker dollar and speculation the oversupply still weighing on global markets will diminish, even after prices fell into a bear market on Monday. Nationwide inventories probably declined by 1.75 million barrels, a Bloomberg survey shows before the EIA report.
“There are concerns about the oversupply situation continuing”.
“Sentiment remains quite negative following the price slump recently”, said Eugen Weinberg at Commerzbank.
“In the last 72 hours, there have been reports of successful negotiations to re-open blockaded oil terminals in Eastern Libya and US airstrikes against Daesh (ISIS) in Sirte”. A drop in United States equities has also offset an early boost for crude prices from a weak U.S. dollar.
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Prices scraped back some of their losses on Tuesday after disappointing US GDP growth figures hurt the greenback, making dollar-priced oil cheaper for those using other currencies.
