Oil steadied as traders paused for breath after betting Brent up to near all time record highs this week and pushing US crude to fresh 11 month highs earlier in the session.
'No doubt crude has become a bit overbought since there has not been a significant correction in the market since the June 27th low. However, there may not be too much downside satisfaction since there seem to be very few reasons to be bearish,' said Man Financial analyst Mike Fitzpatrick.
He added while some profit taking might be seen ahead of the weekend, bullish sentiment suggests price corrections are likely to be very brief and very shallow.
At 4.51 pm, London's benchmark Brent crude contracts for September delivery were up 5 cents at 76.81 usd per barrel, having hit a day high of 77.57 usd earlier, less than a dollar short of an all time record peak of 78.65 usd.
Meanwhile, New York crude contracts for August delivery were down 10 cents at 74.97 usd per barrel, having hit a fresh 11 month high of 75.87 in intraday trades. Analysts said the contract was volatile ahead of expiry tomorrow.
Oil prices rallied earlier in the session on news Total has reportedly declared force majeur from its 220,000 bpd Dalia oilfield in Angola after a problem with a generator shut in around 50 pct of output at the field.
In the background, US government data showing a surprise drop in gasoline stocks yesterday also underpinned prices, as traders fretted over potential stock shortfalls amid the peak demand driving season.
'The latest stock data indicates the US could still be faced with a tight gasoline supply situation, especially since gasoline demand at 9.71 mln bpd is just shy of the record high,' said Fitzpatrick.
Elsewhere, crude prices also took support from news this morning that China's economy continued to race ahead in the second quarter, expanding to 11.9 pct, while oil imports in the first half were up 11.2 pct year-on-year.
'Crude oil prices have been trending higher on the outlook for global oil supplies to tighten amid rising global demand. News that China's Q2 GDP grew at an annual rate of 11.9 pct certainly supports the outlook for robust global energy demand,' said Fitzpatrick.
Brent crude has gained some 6 pct over the past three weeks as key industry bodies forecast strong demand this year and next, and as North Sea supply constraints add to geopolitical tensions in Nigeria and the Middle East.
But seasonally low US gasoline stocks, which have dwindled after a spate of unforeseen refinery outages this year, remain the chief driver of higher prices currently, analysts said.
The EIA data released yesterday showed that US gasoline inventories fell by 2.3 mln barrels to 203.3 mln barrels, despite expectations for a rise of around 100,000 barrels.
Meanwhile, crude stocks dipped by 500,000 barrels to 352.1 mln barrels in the week to July 6, roughly in line with expectations.
Refinery runs increased by 0.8 pct points over the week to operate at 91.0 pct of their capacity, against expectations of a 0.3 pct rise.
'The market has been discounting the fact US crude oil stocks are at the highest level since 1993 on expectations for demand to rise as refinery operations pick up, and the latest inventory data suggests this is occurring,' said Fitzpatrick.
source:forbes.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment