The recent selloff accelerated last week after USA gasoline stocks rose 452,000 barrels to hit almost 242 million barrels in the week ended July 22, a time when gasoline stocks usually fall.
Advertisement
“We got here on the back of excessive storage in crude oil and gasoline”, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.in NY.
American oil drillers added 44 oil rigs last month – the highest amount in any month since April 2014 – according to Baker Hughes latest rig count. The global benchmark traded at a premium of $1.15 to WTI for October.
State-owned Saudi Arabian Oil Co said today it will sell cargoes of Arab Light in September at US$1.10 (RM4.43) a barrel below Asia’s regional benchmark. That is a pricing cut of US$1.30 from August, the biggest drop since November, according to data compiled by Bloomberg. Currently, U.S. oil rigs are standing at 374, way higher from the lowest level of 317 rigs in early April. The nation’s crude inventories rose to 521.1 million barrels through July 22, keeping supplies more than 100 million barrels above the five-year average, Energy Information Administration data show.
Many expect refineries to slow their crude buying in the weeks to come because they have produced even more gasoline and other fuels than record demand could absorb.
Gasoline for September delivery slipped 1.6% to $1.3036 a gallon, the lowest close since March 3.
Analysts of the US JP Morgan bank expect OPEC oil production to continue rising reaching 32.8 million barrels per day in 2016 and 33.1 million barrels per day in 2017. Libya has reopened four oil ports after the resolution of a pay dispute with guards, according to a statement from the Petroleum Facilities Guard.
Iraq overtook Saudi Arabia for the first time in the June quarter to be India’s top oil supplier, helped by sales of discounted heavy crude that refiners have also been using to make bitumen to build roads in the world’s No 3 oil consumer.
Oil has been in a steep descent since the start of July after gasoline and other fuel cargoes began backing up world- wide and a spring rally lured US producers into adding more working rigs.
Advertisement
The current downward correction in oil prices will bottom out in the high-$30 range, said Societe Generale SA.
