Futures hit two-month lows on Thursday, with WTI breaking below key support of $US45.83 after weekly drawdowns in US crude looked inadequate to assuage investor concerns.
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The tightening outlook for the supply-demand balance over the next 2-3 years should provide some support for oil prices even if hedge funds continue to cut their positions in the near term.
Oil prices remained near two-month lows from the previous trading session on Tuesday as financial traders lost confidence in a recent price rally, switching positions in anticipation of lower prices. The United States of America Texas Intermediate (WTI) crude CLO1 rose by 11 cents to about $45.52 a barrel. Market players believe that the return of Canadian and Nigerian crude oil, after the cuts in the Libyan oil export, turned the market sentiments bearish.
Brent crude oil is down about 3.6 percent, or about $1.75 per barrel, since the June referendum to leave the European Union passed. Moreover, since crude has always been priced in dollars, the rising United States dollar may also impact prices, resulting in expensive oil for those who are using other currencies.
OPEC has failed to cap output and Iran is pumping oil at a furious pace just as North American production is picking up.
The prices of local oil majors, Woodside and Santos will come under pressure today despite the small gains in yesterday’s roaring market.
A research note from Citigroup, cited Monday by Bloomberg News, found analysts were expecting oil to recover by next year as the immediate shock from the so-called Brexit subsides.
Oil production from Nigeria has always played a crucial role in the recovery of oil prices.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, dropped 166,000 barrels last week, the API said, according to a person familiar with the figures. Market players believe that any deal with the militant group may hit oil prices.
On Friday, Baker Hughes Inc. reported that the number of rigs drilling for crude in the USA has risen by 10 to 351, the fifth increase in six weeks.
“This will help to clear some surplus in the second half of 2016”.
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They were two month lows for prices. The company’s adjusted net income is expected to come in at $2.04 billion, or $0.54 per share, compared to $1.55 billion or $1.22 per share in the first quarter of fiscal 2016.
