Oil prices rose early on Thursday, extending gains from the previous session following a large draw on US gasoline inventories.
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Brent crude futures were down 33 cents and traded at $42.77 a barrel, while the US West Texas Intermediate (WTI) crude futures slipped 14 cents and traded at $40.69 per barrel, Reuters reported.
Standard Chartered bank said there was “no fundamental justification for recent oil price falls” and that “the global oil market has rebalanced, and USA crude supply and inventories are expected to fall”.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest United States oil-storage hub, dropped by 1.3 million barrels last week, the API said Tuesday, according to a person familiar with the figures. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest USA oil-storage hub, decreased by 1.12 MMbbl to 64.1 MMbbl.
World oil prices advanced Wednesday as tumbling U.S. motor fuel stockpiles offset news of a surprise increase in crude reserves, dealers said.
The last time oil settled below the US$40 threshold was on April 18, when it was US$39.78, before hitting 2016 highs in May and June when it climbed over US$50 a barrel. Refinery rates and crude imports rose.
Average daily domestic crude production was down 55,000 barrels at 8.5 million. 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.
“We got here on the back of excessive storage in crude oil and gasoline”, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.in NY.
“The latest (U.S. regulatory) CFTC data show that speculators increased their shorts (aka bearish bets) by the biggest volume on record in last week’s data for WTI crude”.
Tariq Zahir, an oil bear who trades mostly in timespreads of WTI, is betting the spot USA price will not hold above $40 for long.
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Demand for crude is set to decline in the next few months. But it noted that oil’s recent decline came amid supportive factors like the dollar weakening.DXY and refining margins for petrol 1RBc1-CLc1 widening.
