The price of OPEC basket of fourteen crudes stood at $38.29 a barrel on Tuesday, compared with $39.10 the previous day, according to OPEC Secretariat calculations.
The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Rabi Light (Gabon), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Meanwhile, the Wall Street Journal reports that oil prices gathered steam in early Asia trade Wednesday on the prospect of a drawdown in U.S. crude stockpiles, though prices continued to be at three-month lows on a global supply glut.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $39.74 a barrel at 0334 GMT, up $0.23 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange rose $0.19 to $41.99 a barrel.
Week to date, U.S. oil prices have fallen 5.15%, as domestic stocks of gasoline have been usually high for this time of the year. Last week, the U.S. Energy Information Administration reported that at 241 million barrels, gasoline inventories were “well above the upper limit of the average range.”
Traders and analysts will be monitoring this week’s U.S. Department of Energy data slated for release later Wednesday. Based on estimates by industry group American Petroleum Institute, U.S. crude supplies decreased 1.3 million barrels in the week ended July 29. Gasoline stocks decreased 450,000 barrels, while distillate stocks expanded by 539,000, according to the estimates.
A Wall Street Journal survey of analysts showed crude stocks were projected to decline by 900,000 barrels on average. Gasoline stockpiles are expected to show a decrease of 300,000 barrels. Stocks of distillates, which include heating oil and diesel, are expected to fall by 100,000 barrels.
Despite the anticipated fall in U.S. crude stockpiles, many market watchers said the pace of decline wasn’t quick enough to match the rate of production. Prices of U.S.-traded oil could sink to $35, as the recent rally has encouraged some drillers to return to the fields, they said.
“Our impression of the overall API figures for last week is that the swings are likely too small to put prices onto a different, more bullish path,” said Tim Evans, a Citi Futures analyst.
The anticipated production pickups in Nigeria and Libya, where politically related supply disruptions are being resolved, will also keep the world swamped in surplus barrels.
As the global glut of oil has lingered for two years, many refiners are well stocked, leaving little appetite for fresh barrels. A Citigroup estimate puts global gasoline inventories at around 500 million barrels. In Asia, refiners in China, Japan and South Korea are expected to scale back production to unwind their storage, said BMI Research analyst Peter Lee.
In China, for example, gasoline and diesel inventories kept by locally owned refiners, known as “teapots,” have grown to 576,000 metric tons, or by 16.6%, in the second half of July compared with the first half of the month, said energy consultant ICIS China, based on a survey of 20 major teapots in the refining hub of Shandong. The growth in inventories is a result of poor sales, the firm said.
These teapot refiners started the year on a ferocious shopping spree as they were eager to use their newly obtained importing quota, a privilege that was granted only a year ago. However, as regional margins narrow and refiners are close to filling their quotas, China’s overall crude imports are likely to slow in the next two quarters.
In the first half of the year, China’s crude imports averaged around 7.5 million barrels a day and will likely fall to 7.3 million barrels a day, said Song Yen Ling, senior analyst with Platts China Oil Analytics.
“When prices are in a downtrend, refiners tend to buy less because they don’t want to be stuck selling products priced at $40 when prices drop to $35,” she added.
Nymex reformulated gasoline blendstock for September–the benchmark gasoline contract–rose 25 points to $1.3141 a gallon, while September diesel traded at $1.2660, 70 points higher.
ICE gasoil for August changed hands at $359.00 a metric ton, up $1.75 from Tuesday’s settlement.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $39.74 a barrel at 0334 GMT, up $0.23 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange rose $0.19 to $41.99 a barrel.
Week to date, U.S. oil prices have fallen 5.15%, as domestic stocks of gasoline have been usually high for this time of the year. Last week, the U.S. Energy Information Administration reported that at 241 million barrels, gasoline inventories were “well above the upper limit of the average range.”
Traders and analysts will be monitoring this week’s U.S. Department of Energy data slated for release later Wednesday. Based on estimates by industry group American Petroleum Institute, U.S. crude supplies decreased 1.3 million barrels in the week ended July 29. Gasoline stocks decreased 450,000 barrels, while distillate stocks expanded by 539,000, according to the estimates.
A Wall Street Journal survey of analysts showed crude stocks were projected to decline by 900,000 barrels.
Despite the anticipated fall in U.S. crude stockpiles, many market watchers said the pace of decline wasn’t quick enough to match the rate of production. Prices of U.S.-traded oil could sink to $35, as the recent rally has encouraged some drillers to return to the fields, they said.
“Our impression of the overall API figures for last week is that the swings are likely too small to put prices onto a different, more bullish path,” said Tim Evans, a Citi Futures analyst.
The anticipated production pickups in Nigeria and Libya, where politically related supply disruptions are being resolved, will also keep the world swamped in surplus barrels.
As the global glut of oil has lingered for two years, many refiners are well stocked, leaving little appetite for fresh barrels. A Citigroup estimate puts global gasoline inventories at around 500 million barrels. In Asia, China, Japan and South Korea are expected to scale back production to unwind their storage.
In China, for example, gasoline and diesel inventories kept by locally owned refiners, known as “teapots,” have grown to 576,000 metric tons, or by 16.6%, in the second half of July, compared with the first half of the month, said energy consultant ICIS China, based on a survey of 20 major teapots in the refining hub of Shandong. The growth in inventories is a result of poor sales, the firm said.
These teapot refiners started the year on a ferocious shopping spree as they were eager to use their newly obtained importing quota, a privilege that was granted only a year ago. However, as regional margins narrow and refiners are close to maxing out their quotas, China’s overall crude imports are likely to slow in the next two quarters.
In the first half of the year, China’s crude imports averaged around 7.5 million barrels a day and will likely fall to 7.3 million barrels a day, said Song Yen Ling, senior analyst with Platts China Oil Analytics.
“When prices are in a downtrend, refiners tend to buy less because they don’t want to be stuck selling products priced at $40 when prices drop to $35,” she added.
Nymex reformulated gasoline blendstock for September—the benchmark gasoline contract—rose 25 points to $1.3141 a gallon, while September diesel traded at $1.2660, 70 points higher.
ICE gasoil for August changed hands at $359.00 a metric ton, up $1.75 from Tuesday’s settlement.
Source: OPEC/WSJ
