Oil price rebounds but US supplies continue to weigh
The price of crude oil futures has rebounded so far in today’s trading, following sharp declines over the previous two session. Gains, however, are facing strong headwind following news that US crude inventories reached an all-time high, renewing fears that supply is continuing to outpace demand.
Brent for March delivery had gained 62 cents, or over one percent, to $55.28 a barrel as of 07:46 GMT on the London-based ICE Futures Europe exchange. Yesterday, the benchmark tumbled over three percent. Reuters quoted PhillipCapital investment analyst Daniel Ang as saying that during the course of today’s session “we should expect some recovery considering prices have been dropping”. According to the analyst, news of industry restructuring and lower oil rig counts had been temporarily boosting prices, but crude production still hasn’t actually declined.
March WTI futures had risen 1.80 percent, or 88 cents, to $49.72 in electronic trading on the NYMEX in New York as of 07:46 GMT today. US crude ended the previous session $1.52 lower after a report from the US Energy Information Administration (EIA) showed that US inventories rose by 4.9 million barrels to 417.9 million, a record high, in the week to 6 February.
The Wall Street Journal cited a report from BNP Paribas as saying that despite expectations for higher crude prices during the second half of 2015 “the almost certain global inventory build over the remaining part of the first half of this year is likely to lead to a downward crude price correction in the short term”. According to the newspaper, the and upcoming scheduled refinery maintenance is likely to worsen the current overhang of crude inventories.
Based on the two front month contracts, Brent was trading at a premium of $5.56 to WTI as of 07:46 GMT. The ratio had narrowed 26 cents from yesterday’s $5.82 close.