US Crude Oil Price Heads Lower Again

Cornelia Mascio
Luglio 19, 2018

Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world's biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

However, attention turned Thursday from demand to supply, with the EIA figures also showing that inventories of crude rose by 5.8 million barrels and output hit a record 11 million barrels per day.

Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT.

"Production disruptions and large supply shifts driven by US political decisions are the drivers of this new fundamental volatility, with demand remaining robust so far", Goldman Sachs said in a note on Monday, adding that Brent Crude is expected to trade in the $70-$80 a barrel range amid this new fundamental volatility. However, gains were likely limited by the larger-than-expected build in crude inventories and more importantly, the jump in USA production to a record 11 million bpd.

OPEC and non-OPEC producers cut oil output in June by 20% more than agreed levels, compared with 47% in May, the Reuters newsagency reported Wednesday.

The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.

"With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market's tide", he said. U.S. light crude was 75 cents lower at $68.01.

Brent has fallen nearly nine per cent from last week's high above $79 on emerging evidence of higher production from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, as well as Russian Federation and the United States.

Goldman still thinks that Brent could retest the $80 a barrel market, but only late this year, instead of in the summer, depending on US oil policies.

A Reuters poll taken before the data release had forecast gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.

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