In midday London deals, Brent North Sea crude for September delivery lost 36 cents to $44.36 a barrel compared with Monday’s close. “U.S. oil production also increased”, ANZ bank said on Thursday.
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“The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces: wildfires have helped offset surprisingly strong Iran production, slowing demand growth in India and China in 2H16 will help offset production issues in Nigeria and Venezuela and finally product builds have offset crude draws”, they said.
US WTI futures fell 63 cents, or 1.5%, to $41.29 a barrel by 11:48am EDT (3:48pm GMT). The S&P 500 has surged higher to new highs, while WTI crude prices have pulled back to their lowest level in more than two months.
Oil markets have been spooked recently by a glut of oil products, which has has been exacerbated by disappointing demand during the U.S. driving season. “We think there’s more to go on the downside because the move that we saw up to $50 was fundamentally driven but that created more supply”.
U.S. inventory reports from industry group the American Petroleum Institute and the U.S. Department of Energy due this week are expected by analysts to show a fall in crude stocks but a rise in gasoline supplies. US West Texas Intermediate (WTI) crude was at $41.94, still up 2 cents from its last close but down from a high of $42.18 earlier in the day.
Distillate fuel inventories decreased by 0.8 million barrels last week but still stood above the upper limit of the average range for this time of year, the agency said.
New tensions in Libya highlight that the OPEC member is unlikely to see a significant boost to its oil exports any time soon, after the national oil corporation said it objected to a deal to reopen key ports.
Now, the liquidation of old long positions, which profit from rising prices, is being replaced by the establishment of short positions, which make money out of lower prices, as fund managers try to capitalize on the downward cycle in prices.
USA rig count was up for the fourth consecutive week increasing by 15 to 462 for the week of July 22, and taking the number of rigs by 58 since mid-May.
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Oil companies have also reported lower earnings lately, hit by weak refining margins.
