Oil prices eased Thursday
Oil prices fell slightly on Thursday despite support from a weaker US dollar as record highs of crude inventories in the United States offset suggestions that OPEC-led supply cuts were beginning to reduce supplies.
Earlier in the week, the Energy Information Agency reported US oil inventories fell slightly, helping lift oil prices on Wednesday.
“Market focus remains centered on escalating U.S. production growth and elevated domestic inventory levels, but this is not representative of the rest of the world. Inventories are drawing in several other key regions,” Reuters reported RBC Capital Markets analysts noted.
“Despite the broad-based headlines of a holistic global oil surplus, we contend that certain markets such as Asia remain in a deficit, while regions like the Atlantic Basin and the U.S. remain in surplus.”
Brent crude was 6 cents lower at $51.75 a barrel, recovering from Tuesday’s drop to $50.25, its lowest since Nov. 30. Today’s price is nearly $7 below January’s peak of $58.37.
US light crude was down 16 cents to $48.07 a barrel, also climbing from a three-month low hit on Tuesday.
Oil prices received some support from the US Federal Reserve on Wednesday when it signaled it would not accelerate plans to increase interest rates which led to a fall in the US dollar against a number of currencies. The drop in the value of the greenback lifted to dollar-dominated oil price.
“I don’t think that’s going to be a massive influence at this point in time and the main reason being that it is a small move and the risk trade is still on at this point,” Mark Watkins, regional investment strategist at the Private Client Group at U.S. Bank told Reuters.
“Unless there is a global disruption where money needs to move to a safe haven, the interest rate movement isn’t going to have a long term material impact at this point in time.”