Oil prices fell and US crude settled below US$50 a barrel yesterday after government data showed crude inventories in the United States rose last week and as a stronger dollar and weaker global equities applied pressure.
US crude oil stocks rose 2.5 million barrels, the Energy Information Administration (EIA) said in its weekly report, contrasting with expectations of a 2.3 million-barrel drawdown.
“The crude oil inventory rise was driven by a strong rebound in crude oil imports, which neared 8 million barrels per day,” said John Kilduff, partner at Again Capital LLC in New York.
Crude oil imports from Saudi Arabia rose to 1.44 million barrels per day (bpd), up from 1.32 million the previous week, according to EIA data.
Equity markets pulled lower by a weak revenue forecast at Apple Inc and the stronger dollar also pressured oil.
A stronger greenback makes dollar-denominated oil more expensive for consumers using other currencies.
US September crude fell US$1.67, or 3.28%, to settle at US$49.19 a barrel, first settlement below US$50 since April. The US$49.04 low hit in post-settlement trading was a September contract low.
US crude dropped below US$50 on Monday for the first time since April and its 14-day Relative Strength Index is below 28. A reading below 30 is considered an indication of an oversold condition by technical traders.
Crude stocks rose 813,000 barrels at the Cushing, Oklahoma, delivery hub, helping widen the spread between US and Brent crude to near US$7 a barrel.
Brent September crude fell 91 cents to settle at US$56.13.
“The fact that Cushing contributed almost one third of the increase added to today’s downside response,” Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
Pressure has been rising on the Organization of the Petroleum Exporting Countries (OPEC) to adjust production in the face of an expected rise in Iranian exports if sanctions are loosened. A sharp fall in the Chinese stock market and concerns about the Greek debt crisis have also added to worries about demand for petroleum.
OPEC delegates indicated this week they expected the recent price drop to be short-lived and that they would not deter from a strategy of keeping output high to protect market share.
US August RBOB gasoline initially pared losses on EIA data showing stockpiles fell, but settled 2.7% lower.
Distillate stocks fell less than expected, the EIA said, limiting losses for ultra-low sulphur diesel (ULSD) futures. – Reuters