Hong Kong: Oil halted its slide below $40 ( ₹ 2,670.60) a barrel as weekly industry data showed US crude inventories declined, easing a supply glut that’s at the highest seasonal level in at least two decades.
Futures rose as much as 0.9% in New York after slipping 5% the previous two sessions. Inventories slid by 1.34 million barrels and gasoline stockpiles fell, the American Petroleum Institute was said to report. Energy Information Administration (EIA) data on Wednesday is forecast to show crude and motor fuel supplies decreased. Brent oil, the global benchmark, entered a bear market on Tuesday, joining West Texas Intermediate (WTI).
Oil has tumbled more than 20% from its June peak, meeting the common definition of a bear market and ending a recovery that saw prices almost double from a 12-year low in February. Analysts from Citigroup Inc. to Bank of America Merrill Lynch are confident the slump will be short-lived and investors are paying the smallest premium in two months to protect against a drop in crude from now through the end of the year.
“The decline is not totally unexpected, but the speed and severity of the fall has been a surprise” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd in Sydney. “Disruptions tightened the market during the second quarter and the sustainability of those was always going to be relatively short lived. There are still relatively high inventories but the market is approaching a balance.”
WTI for September delivery climbed as much as 35 cents to $39.86 a barrel on the New York Mercantile Exchange and was at $39.84 at 10:05am Hong Kong time. The contract lost 55 cents to $39.51 on Tuesday, the lowest close since 7 April. Total volume traded was about 34% below the 100-day average.
Brent for October settlement was 27 cents higher at $42.07 a barrel on the London-based ICE Futures Europe exchange. The contract fell 34 cents, or 0.8%, to $41.80 on Tuesday. The global benchmark was at a premium of $1.47 to WTI for October.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, dropped by 1.3 million barrels last week, the API said Tuesday, according to a person familiar with the figures. Nationwide inventories probably declined by 1.75 million barrels, a Bloomberg survey shows before the EIA report. Bloomberg
