“Adding to global oil product glut woes are figures showing that Chinese exports of gasoline and diesel surged in July from a year ago”, it said, adding that reports that Iraq will resume crude oil exports from its northern fields heaped further pressure on prices.
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Futures fell as much as 1.2 percent in NY after climbing 16 percent over the previous seven sessions amid speculation informal OPEC talks next month may lead to action to stabilize the market.
West Texas Intermediate (WTI) crude futures have fallen 3.5 per cent over the last two days, after touching a seven-week high near $49 a barrel on Friday.
However, analysts warned the rally was overblown, especially since planned talks between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russian Federation to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang. WTI oil prices are trading at 47.02 and Brent oil is down 12 cents at 48.86.
According to Olivier Jakob, analyst at the Switzerland-based Petromatrix, the dynamics of the market are being controlled by short selling and short covering, market terms for selling a crude contract and then buying it back later for a lower price.
Meanwhile, Iraqi Oil Minister Jabar Ali al-Luaibi asked foreign oil companies to increase oil and natural gas production and exports in order to maximise the Opec nation’s revenue, ministry spokesman Asim Jihad told Reuters.
Some analysts have warned that the current rally in prices could be self-defeating, as it encourages USA shale producers to drill more, underlining concerns over a global supply glut.
“The verbal intervention in the oil market which initially came from weaker Opec members got a strong boost when Saudi Arabia’s energy minister joined in”, says Elo Hansen, head of commodity research at Denmark’s Saxo Bank.
Opec members will meet in September to discuss a freeze in output levels in order to combat continued oversupply in the global oil market.
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Also, Iran sold heavy crude oil at $39.92 in the mentioned week, with $1.98 rise from its preceding week.
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The selloff has battered the economies of Venezuela, Iraq and Nigeria, which are more anxious to boost crude prices than major OPEC producers such as Saudi Arabia and Iran, which are more keen in protecting market share.
