The price Venezuela receives for its mix of medium and heavy oil rose for a ninth consecutive week as oil prices around the world continued strengthening on falling US stockpiles and attacks by militants in Nigeria on pipelines.
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WTI traded above $50 only for contracts from November and beyond. In the options market, investors seem to be concluding that the rebound in oil prices lacks legs.
Still, the consensus among analysts is that oil prices are unlikely to make further gains, despite having broken past the US$50 level.
USA crude CLc1 was down 40 cents at $48.67 a barrel.
Prices have nearly doubled since hitting near 13-year lows at the start of the year as USA supplies slowly shrink, while production in Nigeria is hit by rebel unrest and Canada’s key oil region is ravaged by wildfires. However, the three-day winning streak of oil prices ended Thursday as traders were looking for excuses to lock in profits. Shale drillers added 12 oil rigs in the US over the past two weeks in the first consecutive weekly gains since August, according to Baker Hughes Inc. data.
United States crude slipped over 3% to $49.07 a barrel on Friday, thanks to growth in the USA rig counts, a surge in the dollar, and traders’ concerns over U.S. supply levels. Last week, the rig count rose by nine.
“Against the backdrop of low global oil prices, Chinese crude oil demand will remain well supported this year as demand continues to gain traction from stockpiling activities and refining use”, energy consultancy FGE said in its June outlook.
Brent crude oil futures slipped below $50 a barrel, falling 50 cents to $49.85 by 0226 GMT, easing for a fourth successive day. At the same time, U.S. contract West Texas Intermediate hit $51.67 a barrel – a peak since July 2015.
Fawad Razaqzada, chief technical analyst at Forex.com and City Index, said that “although the oil rally could still go north of $60 and reach even $70”, the latest rig-count data serve “as a reminder that the global supply glut is unlikely to be eradicated completely any time soon”. “A Brexit could turn market sentiment around”.
Analysts said fall in crude oil futures is mostly in tune with a weak trend in Asian trade where prices slipped again today, extending last week’s losses, fuelled by worries about the global economy, Britain’s future in the European Union and producers bringing more rigs back online. A 1% rise in the price of oil leads to an increase in rig counts in key oil fields eight to 12 weeks later, according to Bank of America Merrill Lynch.
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Back on Nymex, prices for July gasoline lost 2.3 cents, or 1.5%, to $1.536 a gallon, while July heating oil fell less than half a cent to $1.515 a gallon.
