U.S. crude oil prices decline to $60 per barrel Thursday, extended huge losses after a two consecutive sessions. The US government data showed an incredible increase in inventories of refined fuels like gasoline. The benchmark US oil contract - for August delivery, ended at $59.70 per barrel on the New York Mercantile Exchange. The global Brent crude oil deal ended at 29 cents, or 0.5 per cent, lower at $63.20 a barrel on the ICE Futures Europe Exchange.
Earlier this year, after assembling from multiyear lows in oil prices, both the contracts stuck around $60 per barrel for about last two months, and were pulled back from highs for the year set in May and June. In spite of ups and downs in crude oil prices, its demand has been strong, and its supplies continue to mount in the US and worldwide.
A senior analyst at futures brokerage Tradition Energy in Stamford, Conn., Gene McGillian said that investors are waiting for strong evidence of tightening rules. But, the analysts haven’t noticed any such evidence in that. The rally has been delayed, as analysts haven’t noted any kind of production curtailment. The oil market seems to run against the wind.
On Wednesday, inventory data presented by the US Energy Information Administration showed that oil refineries ran at maximum capacity last week. The sudden change impacted investors, drowning down on crude inventories by at most 5 million barrels. But, the refinery activity accounted an increase in fuel production, rather than decrease; as analysts have projected for fuel products.
Most Analysts were baffled on the outlook revealed by the reports. While the increase was bearish, and a few of them stated that the results were neutral to elevate refining activity, and pointed to other data, indicating a strong gains in drivers’ fuel demand. But, the agency’s reports revealed that oil prices have once again edged up to at least 9.6 million barrels a day, and the figures indicated that the market remains well supplied with oil.
Analyst Dominick Chirichella of the Energy Management Institute said that the market is shifting from crude oil stockpiles into refined products inventory. Market segment remains mixed and slightly subjective to the downside part.
Global market analysts are more focusing on potential bearish aspects for supplies, with the looming possibilities of a nuclear contract with Iran, which could eventually bring up to a million oil barrels back into the market.
Market watchers also noticed Chinese custom data showcasing a decline in crude imports in May. China has been a key source for the market to buy crude oil, while it is cheap to append its commercial and strategic reserves. And, any evidence of weakening demand of oil prices would take away a rare source of market strength, as assumed by analysts. Research consultancy JBC Energy said that available storage space for oil inventories in China may be shrinking.
It seems that crude-oil futures remain range-bound in early Asian trade Friday, after dropping for two consecutive sessions with some market analysts to push the market in one direction.
Market Review: In the refined fuel markets, the gasoline futures fell 1.87 cents, or 0.9 per cent, to $2.0365 a gallon; while diesel futures fell 1.38 cents, or 0.7 per cent, to $1.8620 a gallon.