The fresh weekly stockpile report by the American Petroleum Institute will be released later in the day, while the official government’s data by the Energy Information Administration are scheduled for Wednesday.
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Global benchmark Brent crude futures dropped over 3 percent to a low of $30.43 per barrel on Tuesday, a level last seen in April 2004, before edging back to $30.69 by 0744 GMT, still down 86 cents from their last settlement.
The slowdown in China’s growth witnessed a slide in the yuan, resulting in two emergency suspensions in stock trading last week.
Morgan Stanley expects Brent oil prices to average $42 a barrel this quarter, with the USA benchmark around $39 a barrel. “Implied oil demand in China contracted 4.9 % (537,300 thousand barrels per day) month-on-month and 2.0 % (216,700 thousand barrels per day) year-on-year in November, the first decline since July 2014”, Barclays bank said in a note late on Friday. Brent crude traded as low as $30.50 on the market.
Iran is increasing output at fields in the West Karoun region, near the Iraqi border, and most of the crude in the new blend will come from the Yadavaran, South Azadegan and North Azadegan fields, the National Iranian Oil Company official said, declining to be identified due to company policy.
Crude oil is tanking, again.
“Sentiment indicators are all to the extreme sell”, Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone.
The plunge has confounded pretty much all predictions, and yesterday led analysts at Morgan Stanley to admit that the worst case scenario they predicted for oil actually turned out to be too optimistic.
The differential as of January 8, 2016, was $0.39 per barrel.
Thanks to the U.S. shale oil revolution, American oil production has nearly doubled in the past six years.
“Oversupply may have pushed oil prices under $60, but the difference between $35 oil and $55 oil is primarily the U.S. dollar”, it added.
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Although there was no news on China’s economy on Monday, the fact that share prices fell even after China’s central bank marked the currency up for the second day in an attempt to soothe markets after its recent devaluations was a worrying development. The high production levels, which were most noticeable following January 6, have contributed to falling wholesale gasoline prices, Lundberg said.
