Oil holds after longest rally since June with stockpiles easing

(Aug 5): Oil held near US$41 a barrel in New York after the longest run of gains in six weeks on signs U.S. crude stockpiles extended declines.

The American Petroleum Institute reported crude inventories dropped by 8.59 million barrels last week, with gasoline inventories resuming draws, according to people familiar with the figures. Meanwhile, futures rose 1.7% on Tuesday after a massive blast at Lebanon’s main port rocked Beirut, raising concerns about fresh instability in the Middle East. Authorities didn’t immediately say whether it was an accident or an attack.

Oil has struggled to maintain its momentum after rallying from a plunge below zero in April as rising coronavirus infections raised concerns about a sustained recovery in consumption. OPEC+ is set to test the appetite for demand as the group starts returning supply to the market this month after historic cuts.

The Energy Information Administration is expected to report on Wednesday that U.S. crude stockpiles decreased by 3.35 million barrels last week, according to a Bloomberg survey. That would be the third weekly drop in four weeks.

Prices

West Texas Intermediate for September delivery fell 0.3% to US$41.57 a barrel on the New York Mercantile Exchange as of 8:20 a.m. Singapore time after adding 4.5% in the previous three sessions Brent for October settlement lost 0.3% to $44.31 on the ICE Futures Europe exchange after gaining 0.6% on Tuesday

The blast in Lebanon, caused by highly explosive materials at the port, overwhelmed hospitals with thousands of injured and dozens killed. It comes at a time when the country is suffering it worst financial and economic crisis and is in talks with the International Monetary Fund for a US$10 billion bailout.

Meanwhile, Saudi Aramco will delay the release of official selling prices for September crude sales until later this week or early next week, said people with knowledge of the company’s plans.

Source: TheEdgeMarkets