Crude oil prices fell to their lowest levels since April today, with Brent on track for its biggest monthly loss since December 2015, pressured by slowing economic growth that threatened to increase a supply overhang of crude and refined products.
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Friday’s losses came as fears of a persistent oversupply in the oil markets have been rekindled by a gasoline glut world-wide, as well as by early signs of increasing production in the US and among members of the Organization of the Petroleum Exporting Countries. Brent crude was trading at $42.72 per barrel-a drop of ~1.2%. August heating oil HOQ6, -0.73% lost less than a cent to $1.262 a gallon, trading more than 15% lower for the month.
The more actively traded Brent October contract rose 30 cents to settle at $43.53.
U.S. West Texas Intermediate (WTI) crude fell 26 cents, or 0.6 percent, to $40.88 a barrel, slipping below $41 for the first time since April. For the month, the contract finished down 14 per cent, the biggest decline for a WTI front-month since July 2015.
Goldman Sachs has predicted crude oil prices to hover in the range of $45 a barrel, while Morgan Stanley has also maintained a bearish view on crude prices.
Cheap crude also has led refiners to produce more fuel worldwide, adding to a bloated market. Oil majors ExxonMobil, BP and Royal Dutch Shell had dismal second quarter results from weak refining margins.
“Doubts are rife as to whether the oil supply imbalance is indeed slowly drawing to an end”, said Stephen Brennock, of London-based oil brokers PVM.
Some traders said oil could see technical support in the near-term after Brent and WTI’s drop below the 200-day moving average earlier on Friday.
On Wednesday the US Energy Information Administration reported the first increase in US commercial crude stockpiles since May, adding that inventories were 13.4 percent up on-year and gasoline stocks were 11.8 percent higher.
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Despite this, some analysts said recent price falls in oil had been overdone, especially as demand remains strong despite concerns over future economic growth.
