Oil Prices Swing Ahead of Stockpile Data
07 July 2020 - 8:41PM
Dow Jones News
By Sebastian Pellejero
Oil prices swung between small gains and losses Tuesday,
extending a recent stall around $40 a barrel ahead of this week's
data on U.S. crude stockpiles.
U.S. crude futures for August delivery finished the day down
0.1% at $40.62 a barrel on the New York Mercantile Exchange. That
put prices just 3 cents off from last Thursday's close.
The pause came ahead of data on weekly U.S. crude stockpiles
from the trade group American Petroleum Institute due out late
Tuesday afternoon and Wednesday's Energy Information Administration
report. Last week's data showed declines in U.S. crude inventories,
suggesting the U.S. economy was in recovery mode and oil demand was
rebounding.
Concerns that the rise in new coronavirus cases will hamper the
recovery in fuel demand have weighed on oil prices in recent weeks.
Among other concerns, the health crisis has cast doubt on whether
China, the world's second-largest oil consumer, will reach its
targets to buy U.S. energy. The latest data on U.S. exports in May
show China has purchased just $2 billion of a planned $25 billion
of crude and other products this year.
Demand concerns are being weighed against supply cuts. The
Organization of the Petroleum Exporting Countries and its allies
have undertaken record production cuts to help buoy crude prices.
Saudi Arabian Oil Co., or Aramco, the nation's oil giant, raised
its crude prices for August for a third consecutive month. Analysts
said that could encourage inventory purchases, which would support
oil prices broadly.
In the U.S., crude supply is falling at its quickest pace ever,
adding to the recovery in prices. Weekly output recently fell to
10.5 million barrels a day, down from 13 million barrels in late
March, government data showed. Yet for beleaguered shale producers
such as Chevron Corp. and Continental Resources Inc., oil around
$40 a barrel isn't enough to help ease the strain of debt they took
on during boom times.
As crude trades near the top of its recent range, market
watchers are starting to expect a slight increase in shale output
and the tapering of production cuts, TD Securities analysts said in
a note. That could limit oil's gains.
Brent crude futures for September delivery, the global gauge of
oil prices, fell 0.1% to $43.08 a barrel on the Intercontinental
Exchange Tuesday.
Elsewhere in commodities, natural-gas futures for August
delivery continued to surge Tuesday. Prices have bounced back from
a 25-year low reached late last month, but analysts and traders are
questioning how much higher they can go, since there is too much
supply of the power-generation and heating fuel.
Write to Sebastian Pellejero at sebastian.pellejero@wsj.com
(END) Dow Jones Newswires
July 07, 2020 15:26 ET (19:26 GMT)
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