Brent crude oil edged up from a nine-month low on Wednesday amid concerns over the conflict in Ukraine, while ample supply in the United States pressured prices there. Around 20,000 Russian troops were gathered on Ukraine's eastern border and Nato warned that Moscow may invade, exacerbating concerns about oil supplies from Russia, the world's second-largest oil exporter.
Meanwhile, US crude inventories fell 1.8 million barrels last week, according to an Energy Information Administration report on Wednesday. The drop, though in line with expectations, was smaller than the fall reported by the American Petroleum Institute on Tuesday and not large enough to stem a recent drop in prices prompted in part by ample domestic stockpiles.
"The market is digesting the inventory report and it's taking some of the upper pressure out as it looks for the next driver," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. Brent crude oil rose 10 cents to $104.71 a barrel by 1:39 pm EDT (1739 GMT). On Tuesday, Brent closed at its lowest level since November 7.
US crude for September delivery fell 61 cents to $96.77 a barrel, its weakest intraday low since early February. Oil prices have fallen more than $10 a barrel over the past six weeks, as global supply has exceeded demand, building up a glut in the Atlantic Basin and Asian markets. Despite prolonged violence in several key oil-producing regions, traders have become increasingly nervous about weak seasonal demand and poor refinery margins in a global market that is well supplied with high quality, light crude oil.
But demand for gasoline in the United States was strong, as indicated by an unexpectedly steep drop in gasoline stocks, which fell 4.4 million barrels, according to the EIA data. New York RBOB gasoline futures rose 1.41 percent, or 3.84 cents, to $2.7539 a gallon. "The drawdowns in gasoline and distillate fuels are impressive, and the further drawdown in crude oil inventories should combine to support the complex," said John Kilduff, a partner at Again Capital LLC in New York.
The drop in US inventories came after upbeat US economic data this week that included a spike in service-sector activity to a nine-year high and a surprisingly large increase in factory orders, possible signs of better oil demand to come. "The fact that it doesn't continue downwards is because of uncertainty over supplies out of Libya, possible threats to Iraqi production and general geopolitical risk," said Christopher Bellew at Jefferies Bache in London. In Iraq, Kurdish forces clashed with Sunni Islamist fighters near Iraqi Kurdistan's capital Arbil, just days after militants defeated the Kurds with a rapid advance through three towns.
Comments
Comments are closed.