Brent crude fell and US crude edged up on Tuesday in spread trading that reacted to data showing a drawdown in stockpiles at a key US hub as concerns persisted that the euro zone debt crisis will curb demand for oil. Inventories at Cushing, Oklahoma, fell 560,000 barrels to 51.34 million barrels in the week to June 8, the first draw at the delivery point for the New York Mercantile Exchange's light sweet crude contract in 20 weeks, according to a report by industry data provider Genscape released on Monday.
Oil also felt pressure on Tuesday from expectations that Saudi Arabia intends to keep production steady despite crude's recent price retreat, even as Opec price hawks call for lower production ahead of a Thursday meeting in Vienna. Brent contracts saw heavy trading, with total volume more than 1 million lots traded, nearing the record above 1.2 million lots, and 82 percent above the 30-day average. Brent's volume was nearly double the turnover for US crude.
US crude bounced after falling to an eight-month low and running into firm support just above $81 a barrel for the third time since June 4. Strong stock index futures and then rising equities on Wall Street also helped lift US crude. "People are waiting for details on what Opec will decide on production levels. They are also waiting for weekly US inventory data," said Rich Ilczyszyn, chief market strategist at iiTrader.com in Chicago.
Brent crude fell 86 cents to settle at $97.15 a barrel, its fourth straight lower close and the lowest settlement since January 2011. But Brent's intraday low of $96.62 left the 2012 low of $95.63 from June 4 intact. US crude rose 62 cents to settle at $83.32 a barrel, after falling to $81.07, lowest intraday price since October 6, but only 4 cents below Monday's low. On Monday, crude futures ended lower and extended losses in post-settlement trading. An early rally of more than $2 on a euro zone rescue package for Spain's banks faded, then reversed on rekindled concerns that Madrid's financial woes will worsen and the debt crisis spread further.
Brent's premium to US crude fell $1.48 to $13.82 a barrel based on settlements, hovering around $13.75 a barrel, near its $13.67 intraday low. The May reversal of the Seaway pipeline has had investors expecting inventories at Cushing to start easing. "The WTI/Brent spread has narrowed to below $14 today and what's driving it are expectations that weekly inventory data will show that stocks at the Cushing, Oklahoma, delivery hub, (had) the first decline after a stretch of weekly records," said Hamzah Khan, analyst at the Schork Group. Total US crude stockpiles are expected to have fallen by 1.4 million barrels last week, a Reuters survey of analysts showed. Gasoline and distillate stocks are expected to have risen.
Ahead of Thursday's Opec meeting, Iran, Venezuela and Angola have all called on Saudi Arabia to rein in production to help halt the recent price slide. Saudi Arabian Oil Minister Ali al Naimi said on Tuesday he was happy with Opec's current oil output target. Asked if he thought a higher target was justified, he said: "Me, why? I'm happy with the way things are." The comment comes after he said in an interview published on Monday said that an increase in Opec's 30 million bpd output ceiling might be justified. Tuesday's monthly report from Opec said a slowing global economy could increase the supply and demand imbalance in the second half of the year.
Comments
Comments are closed.