Crude oil is seen slightly lower on Tuesday as global oil supplies are seen racing ahead of demand. Crude stockpiles probably increased last week while prospects of a slowdown in China’s demand for oil are holding prices down.
The world`s largest consumer, the United States, nearly doubled an estimate of its shale oil reserves on Monday. With the new drilling techniques that unlocked shale deposits nationwide, the total world crude resources are expected to rise 11%.
Meanwhile, the Energy Information Administration report tomorrow may show that U.S. crude inventories probably rose by 550.000 barrels last week after sliding 6.3 million barrels the week before, with the start of the driving season.
Also keeping prices lower is China’s disappointing data over the weekend. The data showed a slowdown in the economy of the world`s second largest oil consumer, amid weak exports in May and domestic consumption struggling to pick up.
- Crude is trading as of this writing around $95.70 a barrel after falling $0.07
- Brent is trading around $103.68 a barrel after falling $0.27
Also helping keeping prices under pressure is the North Sea Buzzard oil field which returned to full production capacity Monday. Oil supplies from South Sudan continued despite threats from Sudan of stopping cross-border flows if it won’t stop backing rebels.
Caution in the oil market is rising as the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) will release their monthly reports of global oil demand today.
Markets will also focus today on the separate stockpile report released by the American Petroleum Institute (API), the U.K.’s GDP estimates and manufacturing production as well as the German court hearing on the ECB’s bond buying scheme.
In Japan, the world’s third largest economy, monetary policy makers disappointed investors. Although Bank of Japan was not expected to take any action during today’s meeting, investors hoped for additional steps to ease the recent market turbulence.
- Natural gas is trading at $3.799 per cubic feet after falling 0.03%
- Gasoline is trading at $2.8468 a gallon after falling 0.05%
- Heating oil is trading at $2.88 a gallon after falling 0.13%