BU: Oil prices tumble in Asia on weak China manufacturing data
Oil swung between gains and losses after a report showed that U.S. crude inventories climbed while U.S. equities were poised to halt a two-day rout.
The data highlighted a surge in US inventories by 7.6 million barrels to 456.9 million in the week to 28 August.
While it has fallen fractionally this morning, the crude oil price enjoyed a spectacular rally late last week, jumping from below $38 to above $44 a barrel in the space of just two trading sessions. Dealers had been hoping that an uptick in US demand, coupled with a slowdown in output, could whittle down the huge global supplies that were a key reason for the collapse in prices from around Dollars 120 in June previous year.
Hedge fund manager Pierre Andurand believes crude prices will head lower again, possibly dropping below $30 per barrel, the Financial Times reported on Tuesday.
Brent crude oil prices fell 3.6 percent at the opening of the trading day in New York to $52.18 per barrel.
Some also wondered if the 25 percent three-day surge through Monday, the biggest since Iraq’s invasion of Kuwait in 1990, was overdone given a persistent global supply glut. Last month’s total was revised 101,000 barrels higher to 32.208 million a day, because of changes to the Iraqi estimate. “And I think we are going to the point…to decide how to manage the market“.
The increase in oil prices was fueled as a commentary from the OPEC said that the group was willing to discuss with other oil producers in order to attain a reasonable price for oil. The Asian giant’s imports are expected to maintain rapid growth into 2016, driven by strong stockpiling for its emergency reserves and the lifting of import restrictions for its so-called “teapot” refineries, analyst Ivan Szpakowski at Citi Research said in a note.
Citigroup Inc. research released last week showed that oil prices and the S&P 500 stock index have moved almost in tandem since mid-August.
Ausick said that it appears the OPEC leadership “agreed to take to the bully pulpit on behalf of those members hit the hardest, knowing that any indication that the cartel was ready to resuscitate pricing by (obliquely implying) lowering production would give crude a shot in the arm”.
The Organization of the Petroleum Exporting Countries said the group’s production rose to its highest level in more than three years, despite global oversupply that has helped send prices tumbling.
