Oil Prices Rebound in Bear Territory
West Texas Intermediate (WTI) and Brent crude oil futures rebounded one day after formally entering bear market territory.
WTI crude oil for July delivery gained 91 cents Thursday, settling at $52.59 per barrel. The WTI peaked at $53.18 and bottomed out at $51.17.
The August Brent oil contract also showed positive momentum, adding $1.04 to end the day at $61.67 per barrel.
Oil futures rose Thursday despite reports that crude oil officially returned to a bear market Wednesday. Traders continue to ponder diminished global oil demand expectations and uncertainty regarding ongoing U.S.-China trade tensions. Moreover, they are analyzing what OPEC and allied oil producers – particularly Russia – may decide when they meet this month.
Mario de la Ossa, energy specialist with Orbital Insight, observed that oil market’s severe correction is no surprise given the failure of global draws to materialize by this time well into the second quarter.
“Unlike Q4 where the correction occurred after lagged official reports showed builds, we are now seeing aggressive corrections that appear to integrate alternative data that makes otherwise opaque regions visible on a daily basis,” de la Ossa said in a written statement from his firm. “We maintain our view that OPEC has little choice other than to continue the cuts. We need to start seeing draws else we are concerned that further downside awaits.”
Reformulated gasoline (RBOB) also rose during Thursday’s trading. The RBOB contract for July settled at $1.71 per gallon, reflecting a 1.5-cent gain.
The price of the Henry Hub natural gas contract, however, failed to mimic that of crude oil and RBOB. July gas futures lost five cents to settle at $2.32.
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