“The market could care less about strong physical markets when it sees potential for another 600,000 bpd of crude”, Scott Shelton, broker with Icap in Durham, North Carolina, said, referring to the anticipated rise in Libyan and Nigerian supplies.
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U.S. inventories of distillates, which include diesel and heating oil, rose 4.6 million barrels last week, government data on Wednesday showed, much more than analysts had expected and the biggest weekly build since January.
On Thursday, traders and investors bought crude to cover short positions as petrol rallied about 5% or more.
The West Texas Intermediate for October delivery added 0.33 USA dollars to settle at 43.91 US dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery gained 0.74 US dollars to close at 46.59 USA dollars a barrel on the London ICE Futures Exchange.
“The Colonial Pipeline issues have resulted in the premium for products today, while crude really seems to be guided by the crack spread”, said Robbie Fraser, commodity analyst at Schneider Electric, referring to the price difference between crude oil and the petroleum products extracted from it.
With low oil prices and a glut of supply in the market, high-cost producers in the US saw less return of their investments, cuts in expenditure and oil wells were shut down. November Brent crude on London’s ICE Futures exchange rose $0.27 to $46.12 a barrel.
Nymex reformulated gasoline blendstock for October-the benchmark gasoline contract-rose 88 points to $1.3703 a gallon, while October diesel traded at $1.3900, 83 points higher. “As for the market’s return to balance – it looks like we may have to wait a while longer”.
Crude fell 2.9 per cent to US$44.97 a barrel in NY.
All three confirmed the continuing oversupply of crude that has engulfed the market and kept prices low over the last 2½ years.
Even when prices fell below $30 a barrel in January, the Kingdom kept increasing its oil production – a strategy to preserve and raise its share in the global oil market, and to force high-cost oil producers, like the USA, out of the market. USA crude fell $1.39, or 3 percent, to $44.90 a barrel in NY on Tuesday. “So, it’s a mixed report -bullish crude and bearish products”.
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Th EIA said Thursday that natural-gas supplies rose (http://www.marketwatch.com/story/natural-gas-futures-pares-losses-after-eia-reports-62-billion-cubic-foot-rise-in-us-supplies-2016-09-15) 62 billion cubic feet for the week ended September 9.
