On Thursday, Oil prices inched lower in European trade, after increasing over 3 percent overnight after a larger than expected gasoline draw reduce worries about global oversupply.
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Futures fell 0.4 percent in NY after rising 6.1 percent in the two sessions through Thursday. The short-term recovery faded as soon as higher prices pushed more output of crude and refined products. The price of USA crude dipped under $40 this week for the first time since April.
Several U.S. refiners, including Alon USA, CVR, Marathon and PBF Energy, announced plans last week to lower run rates.
“We’ve seen prices go from US$51 a barrel about a month ago down to about US$40”, he added.
US oil stockpiles have decreased since hitting their April peak, but they remain near 30-year highs, and that continues to pressure prices.
“For those focusing on gasoline, it was encouraging”, Tamas Varga, an analyst at PVM Oil Associates Ltd.in London, said of yesterday’s EIA report.
“The decline is not totally unexpected, but the speed and severity of the fall has been a surprise” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd in Sydney.
The dollar was up slightly on Thursday, remaining a non-factor to oil’s moves.
Brent crude futures were down 33 cents and traded at $42.77 a barrel, while the US West Texas Intermediate (WTI) crude futures slipped 14 cents and traded at $40.69 per barrel, Reuters reported.
Oil prices rose almost 3 percent on Thursday, with US crude advancing firmly above the $40-per-barrel mark on short-covering and after a modest stockpile drop at the delivery hub for USA crude futures. The global benchmark settled at a $1.60 premium to WTI for October delivery.
US commercial crude oil stocks rose 1.413 million barrels to 522.546 million barrels the week ended July 29, EIA said.
The crude market may rebound to $57 per barrel in 2017, according to a Bloomberg survey of 20 analysts. Stockpiles at Cushing, the delivery point for WTI and the nation’s biggest storage hub, fell the most in six weeks.
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“We had a very big correction earlier, and it might have been overdone”, said Mike Wittner, head of oil market research at Societe Generale in NY.
