Analysts said that high production levels in crude and the refining sector would continue to weigh on markets after contributing to a 20 percent price fall since June.
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Hot from the weakest month in a year in July, global oil futures started August on a similar note, losing 3%, falling under $US40 a barrel in NY, and dipping into bear territory.
US crude was at $40.50 a barrel during morning hours in NY on Thursday, close to four-month lows of $39.19 hit earlier this week. Oil prices enjoyed a rally in late spring and early summer with supply disruptions and the kick-off of peak demand season supporting the rally.
Bloomberg carried out further surveys by interviewing analysts and asking them where they think oil prices will be at by 2017.
“WTI will average $49.50 in the fourth quarter before breaking decisively above $50 next year”, Michael Hsueh, a strategist at Deutsche Bank was quoted as saying by Bloomberg.
Oil prices rose early this morning, extending gains from the previous session following a large draw on USA fuel inventories.
Hedge funds and other speculators have turned more bearish toward crude and refined products in the last two months amid signs of a gasoline glut. The tropical storm, Earl, was 90 miles west of Belize City with top winds of 65 miles per hour, down from 80 mph earlier, the U.S. National Hurricane Center said in an 8 a.m. advisory.
“Crude oil imports processed by East Coast refineries have generally increased since early 2015, averaging 760,000 b/d in May 2016, up from 666,000 b/d in May of a year ago”, according to the brief.
From January to May 2016, an average of 443,000 barrels per day were shipped by rail. “Supply is going down, demand is still going up. Indeed, non-OPEC supply has fallen by over one million barrels per day and demand has risen by a similar amount since this time past year”, he writes. US -based Schork Report said that the earlier price gains were a result of profit-taking from previous short positions that benefited from falling prices along with a fall in the USA -dollar since July.
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A day before, NY traded oil jumped $1.32, or 3.34 percent, after data indicated that gasoline supplies in the US drop suddenly the previous week, offsetting a surprise increase in crude supplies.
