Oil prices settled little changed on Tuesday as demand concerns due to a new surge in coronavirus cases overshadowed U.S. government forecasts for lower production.
Early in the session, the market popped because of the higher forecast demand, and more bullish jobs data, said Phil Flynn, senior analyst at Price Futures Group in Chicago. But the market gave up the gains as focus returned to rising coronavirus cases.
The U.S. Energy Information Administration (EIA), forecast that global oil demand would recover through the end of 2021, predicting demand of 101.1 million barrels per day (bpd) by the fourth quarter of next year.
“Global oil demand continues to recover faster than previously estimated,” Linda Capuano, EIA administrator, said, noting that global liquid fuels consumption in the second quarter was down an average 16.3 million bpd from a year earlier.
Today’s start oil prices are edging lower on Wednesday after industry data showing a build in U.S. crude stockpiles added to worries about oversupply, but hopes for a swift economic recovery in China limited losses.
“The market is mixed as optimism about China’s quick economic rebound is offset by persistent worries that the rising coronavirus cases in the United States and other areas will stall a recovery in fuel demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“We expect the WTI to stay in the $38.50-$41.50 range for the next couple of weeks,” he added.
U.S. crude oil stockpiles rose last week, against expectations for a draw, although gasoline and distillate inventories fell more than expected, data from industry group the American Petroleum Institute showed.
Adding to pressure, the U.S. Energy Information Administration (EIA) said on Tuesday that U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020, a smaller decline than the 670,000 bpd it forecast previously.
However, it also expected global oil demand to recover through the end of 2021.
“The EIA’s forecast of a lower decline in U.S. output was partially cushioned by its outlook for firm demand recovery, which limited losses in oil markets,” Hiroyuki Kikukawa, general manager of research at Nissan Securities said.
“Still, expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allies would taper oil output cuts from August and softer U.S. equities added to pressure,” he said.
Abu Dhabi National Oil Co (ADNOC) plans to boost oil exports in August, the first signal that OPEC and its allies, together known as OPEC+, are preparing to ease record oil output cuts next month.
Oil Future close 7th July, 2020
Brent crude: $43.08 (-0.02) Front Month contract with delivery Sep
Light crude (WTI): $40.62 (-0.01) Front Month contract with delivery Aug
Gasoil ARA; $370.50 (-2.00) Front Month contract with delivery Jul
NY Harbor Ulsd: $382.76 (+0.49) Front Month contract with delivery Aug
The Oil Market is trading at GMT 05.51: Brent -13 cents and WTI -17 cents
Oil Future closed more or less unchanged last night but at the start of the day in Europe
Oil Futures are edging downward. – Expect bunker prices little change today.