West Texas Intermediate for September delivery was at $41.79 a barrel on the New York Mercantile Exchange, down 13 cents, at 11:14 a.m. London time. “This seems a clear signal that Atlantic Basin refined product markets are now oversupplied”, Jason Gammel of U.S. investment bank Jefferies said on Friday.
Advertisement
Market intelligence points to an inventory rise of 1.1 mln barrels at the Cushing, Oklahoma delivery base for US crude futures in the week to July 22.
Oil prices fell to their lowest levels since April on Friday, with on Brent track for its biggest monthly loss since December 2015, pressured by slowing economic growth that threatened to increase a supply overhang of crude and refined products.
Refineries processed an average 26.6 million barrels daily over the reporting period, down 277,000 barrels on the week.
Any one of these events would fully offset Goldman’s projected second-half 2016 deficit of 230,000 barrels of oil, they said, adding, “for now, however, recent developments point to lower, not higher production in both countries”.
That also suggests that oil prices could see sustained falls with growing oil inventories, and some analysts are already paring back their forecasts.
The value of the dollar which has steadily risen over the past month has also put pressure on crude oil prices.
The rough week for oil hit new lows on Thursday, with USA crude entering a technical bear market and closing at $41.14 per barrel, while Brent crude fell to $42.70 per barrel. Normally, oil prices increase when crude oil inventories go down.
Oil prices edged away from three-month lows on Tuesday, supported by a weaker dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls. Analysts had expected a draw of 2.3 million barrels.
Advertisement
The poll showed analysts expect Brent crude futures to average around $51.15 a barrel in the fourth quarter, as supply demand dynamics improve. Gasoline stockpiles expanded in the midst of the US summer driving season, when demand for the fuel typically peaks. Yesterday, market intelligence firm Genscape reported another buildup of 328,000 barrels at the Cushing, Oklahoma delivery hub, adding to the bearish sentiments. WTI earlier fell to $41.21, its lowest since 20 April. I believe that EIA data is more accurate (this time) as rising gasoline glut is directly related to rising gasoline inventories.
