In spite of Wednesday’s gains, US oil prices persist near four month low of $39.19 hit earlier this week.
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WTI’s drop below $40 earlier this week had hardened the resolve of oil market bears to drive prices lower as oversupply, refining cutbacks and a breakdown in the oil/dollar trade appeared to spell an end to this year’s rally.
“We see resistance in oil prices at $40 per barrel as the global overproduction of oil is declining”, it said.
Oil rose in NY amid speculation the oversupply still weighing on global markets will diminish, even after prices fell into a bear market on Monday. In the previous session, it rose 3 percent, after settling below $40 on Tuesday, the first time since April.
PVM Oil Associates lead oil analyst Tamas Varga told the news agency: “Maybe the surprise drawdown in gasoline inventories helped future prices remain stable but that does not change the fact: the USA is flooded with oil”.
USA crude inventories, however, added 1.4 million barrels last week, compared with market expectations for a decrease of 1.4 million barrels.
Over the last four weeks, crude oil imports averaged 8.3 million barrels per day, 10.4 percent above the same four-week period a year ago.
The renewed downturn in oil prices has forced major banks to slash their price forecasts for 2017 as a new bear market induces heightened pessimism.
Brent crude, the global oil benchmark, fell 0.6% to $44.02 a barrel on London’s ICE Futures exchange.
Pay attention to the jobs number in the United States today, because it’s likely that the markets will react to whether or not there is going to be enough demand coming out of the United States be employment. Nationwide inventories probably declined by 1.75 million barrels, a Bloomberg survey shows before the EIA report.
Crude production in the US fell by 55,000 bpd to 8.46 million, the first decline in four weeks.
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“The problem has been that the market priced in a full rebalancing too quickly and discounted the scale of the inventory overhang, which has left many disappointed”. Factions in Libya reached a deal to re-open oil terminals, and Nigeria restarted payments to former militants as the government seeks a cease-fire, addressing some grievances amid attacks that cut crude production close to a 30-year low.
