On Tuesday West Texas Intermediate oil futures declined after a big rally on Monday, as market players awaited fresh weekly information on U.S. stockpiles of crude and refined
products to estimate the strength of demand in the world’s largest oil
consumer.
On the New York Mercantile Exchange, crude oil for May delivery declined 57 cents, or 1.1%, to trade at $51.57 a barrel during European morning hours.
On the ICE Futures Exchange in London, Brent oil for May delivery tumbled 67 cents, or 1.15%, to trade at $57.45 a barrel.
The spread between the Brent and the WTI crude contracts stood at $5.88 a barrel, compared to $5.98 by close of trade on Monday.
Later in the day, the American Petroleum Institute is expected to release its inventories report, while Wednesday’s government report could show crude stockpiles rose by 2.9 million barrels in the week ended April 3.
As of March 27, total U.S. crude oil inventories stood at 471.4 million barrels - the most in at least 80 years.
On Monday, New York-traded oil futures shot up $3.00, or 6.11%, to close at $52.14 amid speculation an ongoing collapse in rigs drilling for oil in the U.S. will result in lower production.
A further boost was given to Nymex prices after industry research group Genscape reported a surprise drop in supplies at Cushing, Oklahoma - a key storage hub and the delivery point for U.S. oil futures.
As for London-traded Brent, a day earlier it surged $3.17, or 5.77%, to settle at $58.12 as investors assessed the impact of last week’s Iranian nuclear deal on global supplies.
Investment bank Goldman Sachs (NYSE:GS) said in a report Tuesday that prices will need to remain low in coming months to achieve a slowdown in U.S. output growth.
“We therefore reiterate our forecast for prices to remain low in 2015 with an only gradual recovery into year-end,” it said.
Market experts largely estimated that a pick-up in Iranian crude exports could take several months after Western powers negotiated a tentative nuclear deal with Tehran last week.
Brent prices were underpinned after Saudi Arabia raised prices for crude sales to Asia, signaling better demand in the region.
