Oil prices flat on oversupply con­cerns, weak dol­lar

Business World - - WORLD MARKETS -

NEW YORK — Oil prices ended largely un­changed on Tues­day as a weaker dol­lar spurred a re­bound from an early slide af­ter the In­ter­na­tional En­ergy Agency (IEA) fore­cast sup­ply could out­strip de­mand.

The mar­ket dipped in post- set­tle­ment trad­ing af­ter in­dus­try group The Amer­i­can Pe­tro­leum In­sti­tute ( API) said US crude in­ven­to­ries rose by 3.9 mil­lion bar­rels in the week end­ing Feb. 9. An­a­lysts had ex­pected stocks to rise by 2.8 mil­lion bar­rels.

Brent fu­tures hit a two-month low early in the day’s ses­sion, but the bench­mark set­tled at $62.72 a bar­rel, up 13 cents or 0.20%.

US West Texas In­ter­me­di­ate crude fu­tures closed 10 cents, or 0.20%, lower at $59.19 a bar­rel.

OVERSUPPLY CON­CERNS

The day’s re­cov­ery ear­lier was sup­ported by the dol­lar, which slid to a one-week low, which made crude cheaper for buy­ers us­ing other cur­ren­cies.

But in thin post-close trad­ing, US crude fu­tures were down 34 cents at $58.95 a bar­rel.

Gaso­line fu­tures also turned neg­a­tive in post- set­tle­ment trad­ing. In­ven­to­ries rose by 4.6 mil­lion bar­rels, com­pared with ex­pec­ta­tions for a 1.2 mil­lion­bar­rel gain. Gaso­line fu­tures fell 0.30% to $1.6737 a gal­lon.

The API fig­ures un­der­line wider con­cerns of oversupply. The Paris- based IEA said global oil sup­ply would out­strip de­mand this year, prompt­ing fears that ef­forts to re­duce in­ven­to­ries would fall short of ex­pec­ta­tions.

“We’ve been un­der pres­sure… it’s all been a func­tion of the IEA re­port,” said Bob Yawger, di­rec­tor of en­ergy fu­tures at Mizuho.

The IEA re­vised its global de­mand fore­cast up­ward by 7.7%.

Still, ris­ing pro­duc­tion, par­tic­u­larly from the US may out­weigh de­mand gains. The US over­took Saudi Ara­bia last week to be­come the se­cond-largest global pro­ducer.

Pro­duc­tion is in­creas­ing against a back­drop of broader mar­ket un­cer­tainty. Since the stock mar­ket be­gan fall­ing early this month, oil prices have wiped away the year’s gains.

“There are a lot of peo­ple who are pray­ing that last week’s col­lapse in crude… was some anom­aly, and that as soon as the stock mar­ket re­cov­ered, the crude mar­ket would re­cover with it,” said Wal­ter Zim­mer­man, chief tech­ni­cal an­a­lyst at United-ICAP.

“So far it’s look­ing a lit­tle omi­nous but WTI has not bro­ken down,” Mr. Zim­mer­man said, adding the con­tract would have to de­cline more to en­ter a bear mar­ket.

Sea­son­al­ity may also be af­fect­ing prices, an­a­lysts said.

“A driv­ing force be­hind the next few weeks of pric­ing vul­ner­a­bil­ity stems from the cur­rent peak in US re­fin­ery main­te­nance sea­son,” Michael Tran, com­mod­ity strategist at RBC Cap­i­tal Mar­kets, wrote in a re­search note.

The US En­ergy In­for­ma­tion Ad­min­is­tra­tion will re­lease weekly in­ven­tory data on Wed­nes­day.

Source: REUTERS

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