Oil prices move lower on seasonal pressures

Aug 16, 2017, 15:20
Oil prices move lower on seasonal pressures

In China, state-owned China National Petroleum Corporation (CNPC) said gasoline demand would likely peak around 2025 and outright oil consumption would top out around 2030.

Market focus was turning to the release of official US Energy Information Administration data later on Wednesday for a further update on inventories.

"Oil futures have become lodged in a tight price range this month as traders await the autumn maintenance period that typically brings with it a seasonal drop in refinery demand and resulting build in crude stocks", he said in an emailed report. Analysts expect a drop of 3.176 million in crude stocks in the USA last week, and a 1.527 million decline in gasoline inventories with distillate supplies down by 620,000 barrels.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.82 a barrel, up 27 cents, or 0.56 percent.

The weekly US crude inventory report from the industry group American Petroleum Institute (API) is due out later on Tuesday.

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Oil prices move lower on seasonal pressures

That compared with analyst expectations for a decrease of 3.1 million barrels. West Texas Intermediate, the US benchmark for the price of oil, was down 0.55 percent to $47.33 per barrel.

"The market took this as a mildly bullish report", said William O'Loughlin, investment analyst at Rivkin Securities. "This is also bearish because the more DUC wells there are, the more capacity is ready to come online in the face of any sort of price rally", said Richey. The price for a barrel of oil dropped below $30 per barrel past year as gains in US oil production added to supply-side concerns from members of the Organization of Petroleum Exporting Countries defending a market share with robust output. Not a lot has changed despite the Opec and Russian Federation efforts recently.

Oil cartel Opec together with non-Opec producers like Russian Federation have pledged to restrict output by 1.8-million barrels a day between January 2017 and March 2018. However, the latest oil market report from OPEC showed that production increased by 173,000 barrels per day in July, after rising by 396,000 barrels in June and by 366,000 barrels per day in May, thanks largely to two exempted countries, Libya and Nigeria. Even so, Citigroup Inc.'s Ed Morse says shale will win over OPEC on oil, as US drillers can survive due to hedging.

The industry-funded American Petroleum Institute will release its inventory data later on Tuesday.

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