MW: Oil slips further, with Brent crude under $104 a barrel
Crude-oil futures reversed overnight gains in Asian trade Thursday, with Nymex crude under pressure from a surprise uptick in U.S. oil stockpiles and the Brent market still waiting for demand to recover.
On the New York Mercantile Exchange, light, sweet crude futures CLU4 -1.28% for delivery in September traded at $97.37 a barrel early Thursday in Europe, down $0.22 in the Globex electronic session. September Brent crude on London’s ICE Futures exchange UK:LCOU4 -1.50% fell $0.34 to $103.94 a barrel.
The U.S. Energy Information Administration reported a surprise 1.4-million-barrel rise in oil supplies for the week ended Aug. 8, versus analyst expectations of a decline, due to higher supply and lower demand from refineries.
The Brent September contract is trading lower ahead of Thursday’s expiry.
The important factor to watch is whether West African oil flows to Asia pick up in September, which would help to clean up the overhang of cargos in the Atlantic Basin, Michael Wittner, head of oil research at Societe Generale said in a weekly report.
“[H]owever, it will depend on Asian demand strength, in the end,” he added.
The current slide in oil prices has highlighted downside risks to crude supply, and given rise to talk of an oil glut, which reflects extreme bearish sentiment rather than accurate fundamentals, Tim Evans, an analyst at Citi Futures said.
Meanwhile, European foreign ministers are planning to hold an emergency meeting on Friday as its governments prepare to scale up their involvement in the Iraq conflict.
Oil prices will likely stay supported at current levels until stronger cues of international conflicts easing are seen, economist Barnabas Gan at Singapore’s OCBC Bank said.
Barring further escalation in geopolitical tensions, he expects year-end WTI and Brent crude prices at $90 and $95 a barrel respectively.
Nymex reformulated gasoline blendstock for September RBU4 -1.69% — the benchmark gasoline contract — fell 74 points to $2.7470 a gallon, while September heating oil HOU4 -1.95% traded at $2.8938, 81 points lower.
ICE gasoil for September changed hands at $883.25 a metric ton, up $8.25 from Wednesday’s settlement.
