Crude-oil futures moved in a narrow price range in Asian trade Wednesday, with Nymex crude trading near its previous close pressured by a further increase in U.S. oil supply.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April CLJ5, -0.45% traded at $49.28 a barrel, unchanged in the Globex electronic session.
Brent crude for April delivery LCOJ5, +0.12% on London’s ICE Futures exchange rose $0.22 to $58.88 a barrel.
The oil price could fall below $45 a barrel but the market appears close to a bottom based on past peak-to-trough declines, the BlackRock Investment Institute said in its February report.
“We expect a modest recovery next year, but think a return to $100-plus prices is far-fetched due to advances in drilling technology,” BII said. It said the current oil oversupply stands at around 2% of global oil demand–the highest level since the Asia crisis of the late 1990s.
With oversupply driving oil market sentiment, oil prices hardly moved after China’s latest manufacturing gauge showed an improvement. The preliminary HSBC China Manufacturing PMI rose to 50.1 in February compared with a final reading of 49.7 in January, data showed.
Wednesday’s U.S. oil inventory data is in focus. Late Tuesday, American Petroleum Institute data showed U.S. crude stocks rose by a large 8.9 million barrels in the week ended Feb. 20. The U.S. energy department will publish its data later Wednesday and analysts expect oil stocks to have risen by 4.7 million barrels.
However, this may be offset by strong fuel demand due to the cold winter season in the U.S., traders said.
In Libya, the country’s largest oil field, the Sarir oil field, was shut down again Tuesday after heavy rain led to a power failure, an official said.
An industry association said Tuesday that oil production in the British section of the North Sea declined in 2014 amid rising costs and low oil prices. Oil output in the region is down around 70% since the North Sea’s peak in 1999.
In the U.S., President Barack Obama vetoed legislation that would have approved the Keystone XL pipeline and authorized Canadian company TransCanada Corp. to construct a 1,179-mile oil pipeline to the U.S.
Meanwhile, oil markets are still supported by strong physical oil demand on the back of low oil prices as refining margins in the U.S., Europe and Asia have risen in recent weeks and oil refineries are operating at high utilization levels.
This price support will remain until refineries start closing for maintenance this spring, and until high oil product stockpiles start weighing on oil prices.
BII said “it would take only small changes to supply or demand to restore balance to the oil market and support prices.”
Nymex reformulated gasoline blendstock for March RBJ5, -0.42% — the benchmark gasoline contract — fell 103 points to $1.6099 a gallon, while March diesel traded at $2.0040, 249 points lower.
ICE gasoil for March changed hands at $574.75 a metric ton, down $4.50 from Tuesday’s settlement.
Source: MarketWatch
