Oil Rangebound as Markets Track Inventory, Currency Swings
Crude-oil futures moved in a narrow price range in Asian trade Wednesday, as the market still lacks direction and investors keep a close watch on U.S. inventory data and currency movements.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $60.04 a barrel at 0412 GMT, up $0.07 in the Globex electronic session. August Brent crude on London’s ICE Futures exchange rose $0.04 to $63.74 a barrel.
“In our view, current pricing reflects a level of uncertainty in the market, particularly about supply-side trends,” said Paul Horsnell, head of commodities research at Standard Chartered, adding that recent demand-supply projections by the International Energy Agency might have added to the confusion.
Oil markets have been rangebound in recent weeks as opinion is divided about the extent U.S. shale-oil production has been hurt by falling oil prices, and whether oil demand is recovering fast enough as economic activity remains slow.
Mr. Horsnell said the market’s short-term focus has returned to fears of a supply surplus after the Organization of the Petroleum Exporting Countries meeting and expectations of ample supply in agency forecasts.
“However, we expect prices to rebound from the current weakness as the key trends for [the third quarter] start to play out,” he said. “We expect global demand to continue to surprise to the upside and begin to run down inventory levels.”
Mr. Horsnell said he also expects monthly falls in U.S. oil production to accelerate and U.S. inventories to fall in a sustained way, and no further significant increases in OPEC output in the third quarter with Iraqi output largely volatile.
Late Tuesday, the American Petroleum Institute said its data showed a 2.9-million-barrel draw in weekly U.S. crude-oil supplies. Inventory data from the U.S. Energy Information Administration is due on Wednesday and markets expect another decline, which should support oil prices.
Investors are also keeping a close watch on wide currency movements in the wake of debt talks in Greece and the coming U.S. Federal Reserve meeting. The market is at the edge of the seat before making a move, analyst Daniel Ang at Phillip Futures said.
Nymex reformulated gasoline blendstock for July–the benchmark gasoline contract–rose 208 points to $2.1453 a gallon, while July diesel traded at $1.8853, 4 points higher.
ICE gasoil for July changed hands at $579.00 a metric ton, up $1.25 from Tuesday’s settlement.
Write to Eric Yep at [email protected]
[“source – nasdaq.com”]