He said the psychological floor price is at $39.40, adding: “We might see some tug-of-war for oil prices at this level, but it all depends on the official data later this evening”.
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At the Multi Commodity Exchange, crude oil for delivery in August was trading lower by Rs 20, or 0.71 per cent, to Rs 2,790 per barrel in 1,673 lots. “But I think this will be shortlived”, said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in NY. Gasoline stockpiles fell by 3.3 million barrels last week, well above the 200,000-barrel decline forecast by economists. The September U.S. Dollar Index traded better from the opening, but received some help later in the session from the ADP private sector jobs report for July that came in slightly higher than expectations. “These increase the chances of a production ramp near term, from 300,000 barrels a day to 600,000 barrels a day”, Morgan Stanley said on Wednesday, although it added that “longer-term (production) growth still looks challenging”. Oil was trading Wednesday at around $40 a barrel, based on immediate delivery for West Texas Intermediate, the benchmark for the United States. “The narrower the spread between domestic and imported crude oils, the more likely coastal refiners will choose to run imported crudes rather than domestic supplies shipped by rail”, EIA said.
USA crude oil imports grew by just over 300,000 barrels per day last week to average over 8.7 million barrels per day for the week of July 29. However the country’s crude supply managed to increase 1.4 million barrels last week, as compared to the markets’ expected drop of 1.4 million barrels.
Oil markets were closer to balancing in the second half of 2016, as oil demand was significantly stronger than expected, while unforeseen supply disruptions occurred.
Oil prices are expected to remain low through mid-2017, according to a recent forecast by U.S. financial services company Morgan Stanley. The rally faded soon after as higher prices spurred more crude and refined product output. Prices are up 0.4 percent this week.
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Refinery crude runs rose by 266,000 barrels per day, EIA data showed.
