By August 1, 2017 Read More →

Oil prices fall 2 per cent on oversupply concerns

Oil prices

Investors concerns about the global crude glut weighed down oil prices on Tuesday. QEP Resources photo.

Oil prices down despite expected drop in US crude stocks

Oil prices fell on Tuesday over one percent as investors grew concerned about the stubborn global crude glut despite an anticipated drop in US crude inventories.

Brent crude settled the day down 94 cents to $51.78/barrel and US crude was down $1.01 to $49.16/barrel.

Pacific NorthWest LNGAccording to a Reuters survey, OPEC production rose by 90,000 barrels per day (b/d) in July, mostly due to increased production in Libya.  Libya along with Nigeria had been exempted from the OPEC supply cut pact due to years of unrest in their oil industries.

“Momentum indicators have us in overbought territory over the last few days, which is telling you [oil] is going to pull back somewhat,” Robert Yawger, director of energy futures at Mizuho Americas told Reuters.

On Tuesday, the American Petroleum Institute will release its data on crude inventories and Wednesday morning, the US Energy Information Administration will release its own data on oil stocks.

Analysts are anticipating a drop in inventories of 2.9 million barrels.

On the demand side, forecasters including the International Energy Agency have increased their estimates and oil major BP reports it expects demand to increase by 1.4 to 1.5 million b/d.

“Global demand is looking pretty strong, and prices will firm around the levels seen today,” BP Chief Financial Officer Brian Gilvary told Reuters.  He made the comment after the company reported its earnings on Tuesday.

Gasoline and heating oil crack spreads rose on Tuesday, partly due to a fire at Europe’s largest oil refinery, the Shell Pernis refinery in the Netherlands.  The facility will remain closed through to mid-August.

Posted in: Energy Financial

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