Brent crude slid more than $1 per barrel yesterday, its seventh straight decline, hitting a one-month low below $109 as Libyan oil exports looked likely to rise and fears eased of supply disruption in Iraq. Brent oil is trading at 108.92 down a penny this morning while WTI crude oil gained 14 cents to trade at 103.55. With tensions and supply disruptions avoided in Iraq and Libya coming back on line there is no justification for crude oil prices to remain above the $100 price level as speculators continue to try to hold up prices.
Oil continued its price decline for the second consecutive session, as Libyan oil exports looked likely to rise and fears eased of supply disruption in Iraq. Libya’s 340,000 barrel per day (bpd) El Sharara oilfield has resumed operations after a four-month strike and this may free more oil for export after last week’s port deal with rebels. In Libya, preparations were under way to reopen two major oil ports in the east. Shut by protests almost a year ago, the Ras Lanuf and Es Sider ports make up more than a third of the OPEC producer’s export capacity.
Brent prices shot higher on June 12, when insurgents from the Islamic State began taking towns across the north of Iraq and raised fears of a disruption to Iraq’s nearly 3 million barrels a day of crude exports. This pushed the price to more than $115 a barrel in mid-June, but those worries quickly disappeared as the violence failed to spread south to Iraq’s oil producing regions. The violence in Iraq hasn’t spread to the south, the source of most of the country’s oil output, and dragged down crude prices. Iraq is the second-largest producer of the Organization of Petroleum Exporting Countries (OPEC).
The API released its weekly inventories report last night and US crude oil inventories declined by 1.7 million barrels for the week ending on 4th July 2014. Gasoline stocks rose by 0.112 million barrels whereas distillate inventories fell by 0.522 million barrels for the same time period.
The EIA is scheduled to release its weekly inventories report in the early North American session and US crude oil inventories is expected to decline by 2.2 million barrels for the week ending on 4th July 2014. Gasoline stocks are expected to decline by 0.2 whereas distillate inventories are expected to increase by 1.2 million barrels for the same time period. In a survey by The Wall Street Journal, analysts expect that crude oil stockpiles fell 2 million barrels in the week ended July 4. Gasoline stockpiles likely fell by 300,000 barrels, distillate stocks are expected to rise by 1.3 million barrels, and refinery is seen rising 0.2 percentage point to 91.6% of capacity, according to analysts.
Natural gas continued to drastic fall trading at 4.207 down 5 pips this morning again. The US summer season continues to be much cooler than expected. U.S. natural gas futures ended down by 0.24 percent on Tuesday after falling to the lowest in six months, on forecasts for continued cooler-than-normal weather and expectations for another big storage build.