In Oil & Companies News 16/06/2015
U.S. oil prices rose on Tuesday on expectations of another weekly drop in U.S. oil supplies as investors kept track of the latest twists in the Greek debt negotiations.
On the New York Mercantile Exchange, West Texas Intermediate futures for July were trading at $59.74 a barrel, up 0.4% from Monday’s settlement. Brent crude for August delivery fell 0.2% to $63.80 a barrel on London’s ICE Futures exchange.
News of Tropical Storm Bill heading for Texas also boosted prices, according to Michael Poulsen, oil analyst at Global Risk Management. The storm could affect U.S. refineries, around 45% of which are located along the U.S. Gulf Coast.
Later on Tuesday, the American Petroleum Institute, an industry group, will publish its weekly survey of U.S. oil inventories. Expectations are for another fall in crude oil, Mr. Poulsen said.
The U.S. Energy Information Administration will release its more closely watched inventory survey on Wednesday. EIA’s report will be scrutinized for its U.S. oil output estimate.
Despite the significant drop in oil-drilling rigs since last year, U.S. output has remained stable at multi-decade highs of 9.6 million barrels a day.
But according to analysts at ING Bank, costlier operations have been scaled down for U.S. onshore or conventional oil projects while shale oil production is expected to fall. The bank sees oil prices strengthening in the coming months with Brent recovering to $75 a barrel and WTI rising to $73 a barrel by year-end.
Meanwhile, wider financial markets will be tracking the Greece debt negotiations and the U.S. Federal Reserve meeting scheduled for later this week for their effect on the dollar. The gyrations of the greenback typically affect dollar-priced commodities such as oil.
Depending on how the Greek negotiations, currently at an impasse, are resolved this can also have an effect on eurozone sentiment and the wider economy.
“If the eurozone economy does not pick up despite the stimulus, we may find difficulty for crude demand to pick up from the region,” said Daniel Ang, analyst at Phillip Futures. “Although the eurozone is not the biggest importer of crude oil, in a time of weak demand, every bit matters.”
Nymex reformulated gasoline blendstock for July–the benchmark gasoline contract–rose 0.5% to $2.1110 a gallon, while ICE gasoil for July changed hands at $576.75 a metric ton, up $0.75 from Monday’s settlement.
