As of the writing of this, WTI was trading at US$42.76 a barrel and Brent crude was at US$44.58.
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At about 8am (GMT), prices for benchmark West Texas Intermediate (WTI) crude quoted in NY dived as low as $42.59 per barrel, while Brent crude approached a similar level at $44.28. At almost the same time, Brent reached its lowest since May at $44.14. Spot freight rates have fallen back close to this year’s lows.
West Texas Intermediate futures declined 1.3 per cent after falling 2.4 per cent on Monday.
Both benchmarks inched closer to their 200-day moving average, which if breached, could result in further drops, traders said.
United States energy department data showed Wednesday that inventories were 13.4 percent higher on-year, while gasoline stocks were up 11.8 percent, indicating demand remains weak as the peak holiday driving season comes to a close.
NY oil prices slid Tuesday to a new three-month low, as the market was dogged by resurgent fears over stubborn oversupply. This is way less than the market’s expectations of an inventory decline by 2.3 MMbbls (million barrels).
West Texas Intermediate crude oil has been sinking after USA government data revealed motor fuel inventories jumped by 452,000 barrels last week, compared to analyst expectations of a drawdown, the Financial Times reports. Gasoline stocks fell by 420,000 barrels and distillates stocks grew by 290,000 barrels for the week ending July 22. According to AAA, the national average for unleaded gasoline is down 15 cents in a month.
Domestic crude production rose modestly by 21,000 barrels per day (bpd) to 8.51 million, but oil imports jumped 303,000 bpd to reach 8.44 million, according to the EIA.
Drill rig counts from Baker Hughes also suggest that the recent recovery in oil prices had led to shale drillers jumping back into the market. If FED will be hawkish for rate hike this year, it will support dollar.
On Tuesday, the largest independent USA refiner Valero Energy Corp said it expected lower refinery utilization over the rest of the year to counter slumping margins caused by record supplies of gasoline and diesel.
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Dollar-denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates. The index still remains near four-month highs.
