Oil Gains after Crude Stocks Decline
Crude prices nudged slightly higher during trading session on Thursday, after the US Energy Department released a report of a ninth consecutive weekly decline of crude inventories. However, the general build in oil stockpiles limited gains.
On the ICE Futures Exchange in London, Brent crude’s front month contract advanced 15 cents at $47.32 a barrel, while September delivery for US West Texas Intermediate (WTI) crude, the new front-month contract from Thursday, climbed 15 cents at $45.90 per barrel. The August contract expired on Wednesday after rallying 29 cents or 0.7% and ended $44.94 a barrel.
US Energy Information Administration (EIA) revealed that US crude stockpiles tumbled 2.3 million barrels in the week ended July 15. However, the EIA added at 519.5 million barrels, stocks are still at overall high levels for this period of the year.
Furthermore, EIA reported gasoline inventories added 911,000 barrels, against estimates for unchanged and are hovering above the upper boundary of the average range. The month of July is the peak of summer when Americans hit the road for vacations, cranking up demand for gasoline.
Oil Analyst at Societe Generale, Michael Wittner, said: “This week’s report was moderately bullish for crude, which drew slightly more than expected.”
This week, traders cautioned that an oversupply of refined products has progressively worsened the gloomy outlook for US crude for the rest of 2016 and first half of 2017. Spread between near-term and future delivery prices hit its widest within five months.
Meanwhile, a surplus in oil products jeopardizes to drag down oil prices, BMI Research wrote in a note. “An abundance of fuels threatens to dampen crude demand.”
Gains from crude are seemingly brief and temporary, as oil inventories in the US is still sitting at record highs.
Elsewhere in commodities trading, gold for August delivery on the Comex sank to a session low of $1,310.70 a troy ounce, a level last hit on June 24 as a result of the Brexit vote on the previous day.
The reason for the decline in the yellow metal’s prices stemmed for revived bets on the Federal Reserve hiking interest rates later in the year, possibly as early as September. Renewed hopes come from an optimistic economic outlook brought by series of positive economic reports in the US, namely June housing data, retail sales, ISM manufacturing and labor market.
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