Oil holds near US$41 as traders weigh U.S. stockpiles against Fed
(July 29): Oil traded near US$41 a barrel as investors shifted their focus to domestic supply, with expectations for another build in already swelling U.S. stockpiles countering anticipation of a dovish statement from the Federal Reserve.
Futures in New York were little changed after declining 1.3% on Tuesday. Analysts in a Bloomberg survey expect a 450,000-barrel gain in U.S. crude stockpiles. While the industry-funded American Petroleum Institute reported a 6.83-million-barrel decrease in oil supplies, it posted a rise of 1.08 million barrels in gasoline inventories. The U.S. central bank is set to announce its rate decision Wednesday.
Consultant Rystad Energy highlighted the risks to crude’s recovery from a record glut earlier this year, saying it expects oil supply to eclipse demand for the next four months. The API also reported a 187,000-barrel build in distillate supplies.
Following a swift rebound from April lows, crude prices have struggled to find direction in recent months, with U.S. benchmark futures bouncing in a tight range around $40 a barrel as the resurgent pandemic sours prospects for a demand recovery. In the U.S., New Jersey’s transmission rate hit its highest in three months. Elsewhere, countries from the Netherlands to Malaysia are facing a rise in new cases and China’s virus cluster has spread to Beijing.
Meanwhile, a sharp rebound in gasoline consumption that helped to drive oil prices higher appears to be running out of steam globally as U.S. virus cases continue to rise. Oil-consulting firm FGE said that U.S. gasoline demand will have a hard time reaching 9 million barrels a day this year and the International Air Transport Association’s chief economist expects that future demand for jet fuel will not catch up with the pre-Covid forecast for at least five years.
Prices
- West Texas Intermediate for September delivery fell 1 cent to US$41.03 a barrel at 7:01 a.m. Singapore time
- The contract dropped 56 cents to settle at US$41.04 a barrel on Tuesday
- Brent for September declined 19 cents to end the session at US$43.22 a barrel on Tuesday
Source: TheEdgeMarkets