Thursday marked a decline in oil futures, with the U.S. benchmark touching its lowest level in about five weeks, as markets await confirmation from the U.S. authorities on if crude supplies declined.
On New York Mercantile Exchange, July crude fell 68 cents, or 1.2%, to $56.83 a barrel.
Tracking the most-active contracts, prices
haven’t closed at a level this low since April 22.
On London’s ICE Futures exchange July Brent crude was 56 cents lower, or 0.9%, at $61.50 a barrel.
The American Petroleum Institute’s data released late Wednesday showed a surprise 1.3-million-barrel rise in U.S. crude stockpiles for the week ended May 22.
The U.S. Energy Information
Administration is to release the more definitive data at 11 a.m. Eastern time.
Traders now expect weekly crude supplies to have dipped by 1.8 million barrels, according to a survey of analysts conducted by Platts.
Among the most important factors that supported upbeat oil price
sentiment in recent weeks were signs that low oil prices are started to affect U.S. oil production and inventories.
Inventories are now falling both in absolute terms and in comparison to their seasonal average, as the turning point for U.S. oil inventories came last month, according to Paul Horsnell, head of commodities research at Standard Chartered, said. He now expects inventory levels to keep declining for the rest of the second and third quarter.
A sustained surplus in the global market is not expected, Horsnell said referring to the absence of a flood of oil from Iraq and with U.S. oil production likely to continue falling.
By the fourth quarter, Brent will reach $90 a barrel by the fourth quarter, according to the analyst.
Oil market analysts had different opinions on whether U.S. oil production at current prices is sustainable and on what direction oil prices will eventually take, so futures are likely to be volatile in coming months.
The Organization of the Petroleum Exporting Countries’ meeting is set
for June 5 “with little indication of a shift away from its current
supply policy,” BNP Paribas said in a report which also noted that in the near term oil prices are open to another correction, which would put volatility higher.
