NY: U.S. crude prices fell on Tuesday, hitting three-month lows, on renewed worries of a glut while Brent settled higher due to its better fundamentals versus U.S. crude.
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West Texas Intermediate for September delivery dropped as much as 71 cents to $42.42 a barrel on the New York Mercantile Exchange, the lowest since April 20, and traded for $42.56.
Data from market intelligence firm Genscape pointing to an inventory rise of 1.1 million barrels at the Cushing, Oklahoma delivery point for USA crude futures in the week to July 22 weighed on crude prices, said traders who saw the numbers.
Distillate inventories decreased by 800,000 barrels last week and remain above the upper limit of the average range for this time of year.
Traders said the higher prices were partly a correction after the previous day’s sharp falls, and also reflected a dip in the dollar against other leading currencies away from March highs.
Crude production in the US rose by 21,000 barrels a day to 8.52 million last week, marking the longest series of gains since January, the Energy Department reported.
“Today’s weakness is just part of the general belief that the market is oversupplied.” . Nationwide stockpiles slid by 827,000 barrels, according to the API, and Energy Information Administration data out Wednesday are forecast to show they dropped a 10th week. The global benchmark crude declined 2.1 percent to $44.72 on Monday.
Gasoline demand data often lags by two months or more, but as figures for the beginning of this year’s summer driving season have been released, analysts have trimmed their outlook for 2016 growth.
Record crude output from the Organization of the Petroleum Exporting Countries, a glut of refined products and signs of more drilling activity in the United States in the face of low oil prices have added to concern about excess supply.
Morgan Stanley said headwinds were growing for the second half of the year, leading to an expectation of lower oil prices.
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Money managers cut their net long U.S. crude futures and options positions to a four-month low in the week to July 19, the U.S. Commodity Futures Trading Commission said on Friday. USA light crude was up 5 cents at $41.97.
