LONDON, July 27 (Reuters) – Oil prices fell close to three-month lows on Wednesday after USA industry data showed weekly oil stocks declined by less than expected, feeding into concerns over persistent oversupply dragging down prices.
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Germany’s Commerzbank shared those concerns and cited data from the U.S.’s Genscape indicating the US could see stocks rise by 1 million barrels this week. According to the API, crude oil inventories declined 800,000 barrels for the week to July 22.
“Market-watchers would closely watch on tonight’s crude oil and gasoline inventories in the US, though market calls are still pencilling in a sustained fall in crude stocks while gasoline and distillate stocks are expected to gain to further”, said Barnabas Gan, an economist at OCBC.
WTI fell ahead of oil inventory reports for last week due from industry group the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT). In fact, short term fundamentals should get us anxious as ongoing oversupply will likely keep dragging prices lower. West Texas Intermediate (WTI) crude for September was down $0.06 or -0.14% at $42.86.
Gasoline demand data often lags by two months or more, but as figures for the beginning of this year’s summer driving season have been released, analysts have trimmed their outlook for 2016 growth. Prices dropped 2.1 percent to $44.72 on Monday.
Gasoline supplies stand 11.4 per cent above the year-ago level in the United States, according to Department of Energy. The next set of data from the CFTC, published on Friday, may show a further build up in hedge fund short positions.
US refiners have “overwhelmed even record demand” and global players are also sitting on supplies. While “we are pretty balanced in that $40 to $55 range”, there “could be bearish surprises on the supply side in the coming months”.
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European diesel demand also may be weaker than expected because of Britain’s Brexit vote to leave the European Union, Cohen said. Brokers are mostly expecting demand for crude to remain limited. “We’re not anticipating a return to the old lows, but there’s room to the downside”.
