NEWS & EVENTS: Breaking News
02.07.2009 10:00
July 2. In global petroleum market headlines, oil prices dipped below USD 70 a barrel Wednesday after government data showed a build in US gasoline inventories ahead of the Independence Day holiday, traditionally the peak of the summer driving season. Benchmark crude for August delivery fell 51 cents to USD 69.38 a barrel on NYMEX. In London, Brent prices rose USD 1.21 to USD 70.51 a barrel on the ICE Futures exchange. According to data released by the US Energy Information Administration, gasoline stockpiles in the world's top consumer rose by 2.3 mn barrels last week, above the consensus forecast. Distillate inventories, including diesel, showed a build of 2.9 mn barrels, while crude stockpiles fell by 3.7 mn barrels. Crude supplies have fallen in seven out of the past eight weeks, according to yesterday’s inventory report. The fact that gasoline stocks are up 2.3 mn barrels ahead of the Fourth of July weekend sends a bearish signal, we believe, and points to soft demand. Total US product demand fell 5.8% over the four weeks to June 26 compared to year-ago levels, according to the EIA report. The stockbuilds outweighed optimism in equities markets, with US stocks rising on improving prospects for manufacturing around the world and signs that the global economy is recovering. Further pressure on crude came after a media survey showed OPEC output rose in June, with members' compliance with agreed cuts at 72% last month, a fall from 75% in May. The producer group last year agreed to a series of output cuts aimed at taking 4.2 mn bpd of crude off the market to help stem the slide in crude prices. Kuwait's oil minister said OPEC is unlikely to raise output when it meets again in September if markets remain oversupplied. Output from OPEC member Nigeria has dropped over the past month due to an escalation of civil unrest in its oil-rich Niger Delta region. Tuesday, oil major Royal Dutch Shell said attacks by Nigerian militants had cut its onshore output to around half of what it was producing earlier this year. Moving forward, we expect high volatility to remain in the market and given the tug-of-war between signs of a recovery and persistence of the downturn. In the upshot, WTI and Brent are likely to keep seesawing above and below the USD 70 market for the time being.
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