Oil market supply glut relieved by rising crude price
Rising oil prices ease the oversupplied market that had forecasted a dip in inventory. After an 80 year high, disruptive output from other nations has caused a decline in U.S crude supply, giving the U.S future a sign of relief from the oversupplied global market. New York has seen a 1.1 percent increase. Michael Wittner, head of oil-market research at Societe Generale SA said, “We’re expecting some bullish crude-stock draws. The near-term focus is on the outages. Supply disruptions are the primary driver.”
According to analyst surveyed, The Organization of Petroleum Exporting Countries will probably not set a deadline as it sticks to a strategy from Saudi Arabia to choke out rivals.
July’s delivery for West Texas Intermediate stocks rose 54 cents to $48.62, nearly 30 percent below the 100-day average.
July settlements increased 26 cents to $48.61 in Europe’s exchange as global benchmark traded 1-cent lower to WTI. According to Bloomberg, inventories in the largest oil-storage hub in Oklahoma saw a dip, while supply nationwide rose 541.3 million barrels, near highest since October 1929.
Director of the futures division at Mizuho Securities, Bob Yawger commented, “Anticipation of the API/EIA reports and continuing discussions about disruptions in Nigeria, Canada and elsewhere are supporting prices. The majority of people are looking for a draw of 1 or 2 million barrels, although I’m not one of them, because I think you’ll see that there was a big gain in imports.”
At the Iraq Petroleum Conference in London, Falah Al-Amri, chairman of Iraq’s State Oil Marketing Organization said crude production is dropping in some countries. Production in northern Iraq has declined, and prices will inch up as shortage increases. Evacuation orders have been lifted in Alberta, and wildfires are set to reignite due to cooler, more humid weather that will help contain the area burned. Managing director of ESAI Energy Inc, Sarah Emerson, “Surplus accumulation has really slowed. We were already projecting a deficit in the second-half of the year and now there will be less on hand as we move into it.”
France refineries suffered greatly from the labor dispute, causing shortages in the nation and global economy. Emmanuel Lepine, a CGT union representative said workers took steps to shut down, following similar action by staff at Total SA facilities across the country. Whittner said, “The strike is going to have an impact here. At some point they will have to increase imports to replenish fuel stockpiles.”