Oil Falls Amid Surplus Fears as US Stockpiles Rise
by Bloomberg | Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil shed early week gains after a government report showed a surprising build for US crude stockpiles amid concern that a global surplus will emerge later in the year.
West Texas Intermediate dropped 1.8% to settle below $77 a barrel, while Brent breached $80. US oil inventories rose by 1.36 million barrels last week, snapping a six-week streak of declines. The figure sharply diverged from the American Petroleum Institute’s 5.2 million estimate.
WTI’s prompt spread weakened by the most in three weeks to $1.17, marking a shift to a softer supply outlook. A bright spot for bulls: Gasoline stockpiles declined, while distillate inventories also slid, a sign of persistent demand during the North American summer driving season.
The unexpected increase in oil inventories may depress prices “over the short run,” said Brian Kessens, a managing director at Tortoise Capital Advisors LLC. “Over the next couple of days, I expect geopolitical risk will probably return to the fore.”
Meanwhile, US inflation data released Wednesday was broadly in line with expectations, keeping the Federal Reserve on track to lower interest rates next month.
Oil prices have endured a volatile week after a sharp rally on Monday was partially retraced a day later. The International Energy Agency flagged a global surplus in the fourth quarter if OPEC+ proceeds with plans to restore production in October. The Organization of the Petroleum Exporting Countries had also trimmed forecasts for worldwide demand this year and next, citing downward revisions for China’s outlook.
Algorthmic traders re-engaged in bearish positions on Wednesday, with the investor group now net short by 55% in Brent compared with 27% at the start of the day, according to estimates from Bridgeton Research Group.
Elsewhere, risks remain that a retaliatory strike by Iran on Israel may lead to a spike in oil prices. The US said that the probability of an attack has increased and that it could come as soon as this week, with traders scrambling for protection in options markets.
Prices:
- WTI for September delivery declined 1.8% to settle at $76.98 a barrel in New York.
- Brent for October settlement fell 1.2% to settle at $79.76 a barrel.
by Bloomberg | Mia Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas