Oil prices edged up in early trading on Tuesday after US crude broke below $40 per barrel the previous session, but traders said fuel markets continued to be dogged by excess production.
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US crude stockpiles probably dropped by 2 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration on Wednesday.
U.S. crude stockpiles probably dropped by 1.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration today. The large draw assuaged some market participants’ worry of a petrol glut amid the peak U.S. summer driving season.
Last week, commercial crude oil supplies were up 0.3 percent at 522.5 million barrels, 14.8 percent more than was recorded at the same point past year.
The last time oil settled below the US$40 threshold was on April 18, when it was US$39.78.
On the New York Mercantile Exchange, a barrel of oil for September delivery rose US$1.10 to US$41.93.
Brent crude rose by $1.30, or 3.2 percent, to $43.10. It was up $US1.65, or 3.95 per cent, at $US43.45 a barrel at 0733 Thursday AEST. Crude oil prices also went higher due to traders’ strategies of making short positions in crude oil after a sell-off of 20% from June highs of $50 a barrel.
“But I think this will be short-lived”. “Supply is going down, demand is still going up”.
Data showing an increase in inventories will heighten worries about oversupply and push prices lower, while a decrease will likely provide support.
But a worldwide oversupply since in motor fuels and other refined products has stymied the rebound.
A Wall Street Journal survey of analysts showed the EIA was expected to report that crude stocks declined by 900,000 barrels.
Oil has tumbled more than 20 percent from its peak in June, meeting the common definition of a bear market and halting a recovery that saw prices nearly double from a 12-year low in February. “We expect global growth to move below consensus estimates”, Morgan Stanley said. Goldman Sachs on Wednesday maintained its 2017 target for oil at $52.50.
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“We’re in a vicious cycle, with no sign of this glut in oil products disappearing anytime soon, while any cutback by refiners is backing up crude into the system”.
