Oil markets rose on Friday, recovering some ground after a smaller-than-expected draw in USA crude inventories triggered a selloff the previous session, sending prices to two-month lows.
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The industry-funded American Petroleum Institute reported Wednesday that crude supplies fell by 6.7 million barrels last week. Crude supplies fell 2.22 million barrels in the week ended July 1, Energy Information Administration data showed.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August CLQ6, +0.53% rose 15 cents, or 0.3%, to $45.29 a barrel. Brent for September settlement dropped $1.33, or 2.7%, to $47.47/bbl on the London-based ICE Futures Europe exchange.
Crude oil prices are unlikely to plunge back below $30 as the current situation is much different from the beginning of 2016.
Both key global contracts lost more than US$2.00 a barrel amid ongoing worries as well that the economic impact of Britain’s vote to leave the European Union will also spell slower demand for oil.
“Yesterday we had API come out and give us close to a seven-million barrel draw in crude with huge draws in gasoline and distillates”.
“These are ducks we talk about, where they’re pretty much set and ready to go and they’re just waiting for the right price point [to start operating]”, Kilduff noted. The number of active oil rigs in the USA rose by 11 to 341 last week, Baker Hughes Inc. data show.
US crude futures settled down $2.29, or 4.8 percent, at $45.14.
The market became dislocated earlier this year in the wake of China’s economic slowdown and Saudi Arabia’s vengeful oil price war wherein the Kingdom increased oil production by almost 2 mb/d with the Crown Prince calling for an additional 1 mb/d to come on line at the worst point of the commodity crash in February.
The EIA remarked that the current level of commercial stockpiles is record-high for this time of year, when driving season is in full swing. Prices dropped $2.40, or 4.9 percent, to $46.40 a barrel on Thursday. He said stocks could trade lower if the results are disappointing, but added that if the report is solid or better than expected, investors might wonder if that will encourage the Federal Reserve to raise interest rates. South Korea’s KOSPI was down 0.8 percent at 1958.47.
KEEPING SCORE: Japan’s Nikkei 225 was 0.4 percent down at 15217.24, losing earlier gains. Anthony Starkey, an energy analyst with Platts Analytics, said storage hasn’t dropped off much because more foreign oil is showing up on US shores because of the slowdown in domestic production and because of the narrow difference in the price for WTI and Brent, or the spread.
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CURRENCIES: The dollar declined to 101.02 yen from 101.40 yen.
