The oil market shrugged off reports Wednesday that commercial stockpiles of U.S. crude oil fell by 1.9 million barrels last week, the fifth-straight weekly decline, according to the U.S. Energy Information Administration.
“The decline was slightly below market expectations and stocks remain 88 million barrels above a year ago, which we believe should sustain bearish price sentiment,” BNP Paribas said. It said the resilience of U.S. crude supply is likely to delay the complete removal of excess inventory in U.S. crude balances.
Investors are keeping a close watch on the upcoming meeting of the Organization of the Petroleum Exporting Countries, with some concerns that a decision to maintain or even raise production quotas could accelerate a selloff by speculators.
OPEC oil ministers were optimistic about their strategy of pumping more crude oil and fighting for market share on Wednesday. “In terms of the global trends of energy outlook, the future looks very positive. The global economy is growing,” Saudi Oil Minister Ali al-Naimi said at a conference.
Iraq foresees higher production in the short term, Saudi Arabia is producing at a record level, Libya might be able to step up its output and Iran could also raise exports when sanctions are relaxed.
“All in all, OPEC seems ready for the second round in the battle with non-OPEC countries for the preservation--or even expansion--of market share,” Hans van Cleef, senior energy economist at ABN AMRO, said in a report.
Societe Generale said OPEC’s decision to let prices balance the market instead of production cuts has blunted the significance of Brent crude in price discovery in global oil markets.
“After 2013, the focus of the attention in the oil markets shifted to North American shale production,” said Michael Haigh, head of commodities research at Societe Generale. He said West Texas Intermediate and Light Louisiana Sweet--the two main crude grades in the U.S.--have become the most important global benchmark crudes.
Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract--rose 22 points to $2.0475 a gallon, while July diesel traded at $1.8922, 4 points higher.
More about:
