Oil markets endured another bearish session on Wednesday, with the Brent front-month futures contract falling to a fresh 11-year low as oversupply concerns continued to dominate market sentiment despite geopolitical flare-ups in the Middle East. In addition, USGC crude prices should weaken to support USA crude exports, and Canadian differentials should also weaken to encourage re-exports, the analysts said.
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Light sweet crude oil (WTI) futures plunged 1.07 dollar or 3.15 percent to trade at USD 32.90 a barrel at the New York-based commodity exchange NYMEX.
“If the official USA data comes in anywhere near expectations, it will add to the perception that the supply response is not adequate enough to stabilize prices”, Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. Citigroup described the tensions as “indeterminate” for oil markets in the near term, saying there’s less chance that the Saudis will cut crude output ahead of Iran’s return to the market following the removal of Global sanctions. Inventories probably increased by 500,000 barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Analysts from Citigroup Inc to UBS Group AG predict crude may approach US$30 in the coming months, while U.S. inventories remain more than 130 million barrels above the five-year average.
In London, Brent crude for February delivery, the European benchmark, was down 62 cents at $33.61. WTI-Brent spread was stable on Jan-2016. CBOT corn (up 0.28%) and wheat (up 0.65%) contract saw gains, while ICE cotton (down 0.86%), cocoa (down 2.75%) and CME live cattle (down 0.73%) futures headed lower.
Gasoline supply, by some measures, is due for a decline.
Total motor gasoline inventories increased by 10.6 million barrels last week, and are in the upper half of the average range. The closures occurred late last week and halted about 350,000 barrels a day to the refinery that processes about 306,000 barrels a day. Forecasts calling for colder weather this week improved prospects for heating fuel demand, likely pulling distillate stocks lower last week.
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Trading on its stock markets was suspended for the rest of the day, the second time this week, and China’s securities regulator intervened heavily by issuing rules to restrict share sales by listed companies’ major shareholders.
