Oil prices infamously crashed to $26 in mid-February, setting off a global panic over the health of the economy. Where next for the OIL/USD in latest commodity forecasts?
Advertisement
The draw may help marginally to support crude oil prices, which have fallen over the past week as the market turns bearish in light of fears of a worsening glut as USA producers pick up production.
As a result, refiners will likely reduce orders for new crude feedstocks, putting more short-term downside pressure on prices, and instead start to draw down on brimming inventories. It also showed a decline of 450,000 barrels in gasoline stocks.
“Oil demand remains weak this summer; a period when inventories usually fall”. “Supply disruptions and risk appetite were supportive April-June, but fundamental headwinds are growing, which outnumber any recent positives”.
Refinery utilization at 92.2% capacity is well below the 96.1% refinery utilization in the previous year. The national average for a gallon of gasoline is not spared as it is now pined at $2.13 against its $2.66 at around this in the year 2015.
“We expect to see a little bit of price consolidation from here but our target really is for $35 WTI, which means any rebound you get will be more of a bear market correction”, said Matthew Tuttle, chief executive of Tuttle Tactical Management in Riverside, Connecticut. Stocks of distillates, which include heating oil and diesel, are expected to fall by 100,000 barrels. “There are still relatively high inventories but the market is approaching a balance”.
Investors are awaiting industry data on U.S. crude supplies due later Tuesday, a day ahead of official figures by the U.S. Department of Energy.
Oil prices continued to tumble Tuesday as the September contract for West Texas Intermediate crude fell below US$40 a barrel for the first time in more than three months. The survey did not consider the output from Gabon, the newly added OPEC member. Nigeria has resumed payments to former militants as the government seeks a cease-fire after attacks cut output to the lowest since 1989. However, few experts believe that the world is awash with oil and small drops like these will not support the market.
Morgan Stanley blamed the drop in prices on a stronger dollar, oversupply of refined crude oil products, and new oil data.
Advertisement
“Another bearish development from the CFTC data has been gasoline positioning”.
