On Thursday crude oil declined below the $45 level on lingering concerns over glut in the market.
Brent crude dropped 3 cents to $49.56 a
barrel on London’s ICE Futures exchange, trading near levels not seen
since January.
On the New York Mercantile Exchange, West Texas Intermediate futures dipped 26 cents, or 0.6%, to $44.89 a barrel, on track for its lowest settlement price since March.
Resilient U.S. output came together with high production from other major suppliers and concerns over China’s economy have dampened investor sentiment in recent weeks. Moreover, investors became more bearish with Iranian officials asserting that they aimed to quickly increase crude oil production, once the international sanctions are removed following the nuclear deal with Tehran. A day earlier, U.S. President Barack Obama gave a speech in support of the Iran deal, which is currently under review by U.S. lawmakers.
The latest weekly data indicated a drop in U.S. crude oil inventories — usually a bullish sign of strong demand — but the positive effect was overshadowed by an increase in stockpiles of gasoline and other finished products.
U.S. oil production, meanwhile, rose last week by 52,000 barrels a day to 9.5 million barrels a day.
“Shale oil producers are lowering costs swifter-than-expected, proving their superior competitiveness within the industry, and consequently surprising with resilient production,” Norbert Ruecker, head of commodities research at private bank Julius Baer.
“Taking further into account that we are at the peak of the summer demand season and entering the shoulder autumn months, fundamental support to prices has softened but not the extent the selloff implies,” he said.
Julius Baer slashed its forecasts for Brent prices to a range between $55-$60 per barrel “in the near term, but even lower longer term.”
