Oil Steady After Longest Rally Since June



Oil Steady After Longest Rally Since June
Oil was steady after the longest run of gains in six weeks on signs U.S. crude stockpiles extended declines.

(Bloomberg) -- Oil was steady near $41 a barrel in New York after the longest run of gains in six weeks on signs U.S. crude stockpiles extended declines.

The American Petroleum Institute reported crude inventories dropped by 8.59 million barrels last week, with gasoline stockpiles resuming draws, according to people familiar with the figures. Meanwhile, futures rose 1.7% on Tuesday after a massive blast at Lebanon’s main port rocked Beirut, raising concerns about fresh instability in the Middle East. Authorities didn’t immediately say whether it was an accident or an attack.

Oil has struggled to maintain its momentum after rallying from a plunge below zero in April as rising coronavirus infections raised concerns about a sustained recovery in consumption. OPEC+ is set to test the market by returning supply this month after historic output curbs, while Saudi Aramco is poised to delay the release of its official selling prices for September as producers face pressure to reduce the cost of their crude with demand ebbing.

“Oil prices will really struggle to move higher from here over the next month or two,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd., adding that mobility data in the U.S. needs to improve significantly to generate confidence in a recovery. Aramco’s delay in announcing its selling prices also shows that they “want to get a better sense of customer demand” as production cuts ease, he said.

Prices

  • West Texas Intermediate for September delivery rose 6 cents to $41.76 a barrel on the New York Mercantile Exchange as of 7:45 a.m. London time after adding 4.5% in the previous three sessions
  • Brent for October settlement gained 0.2% to $44.53 on the ICE Futures Europe exchange after gaining 0.6% on Tuesday
  • Crude futures fell 0.4% to 280.1 yuan a barrel on the Shanghai International Energy Exchange

The Energy Information Administration is expected to report on Wednesday that U.S. crude stockpiles decreased by 3.35 million barrels last week, according to a Bloomberg survey. That would be the third weekly drop in four weeks.

The blast in Lebanon, caused by highly explosive materials at the port, overwhelmed hospitals with thousands of injured and dozens killed. It comes at a time when the country is suffering its worst ever economic crisis and is in talks with the International Monetary Fund for a bailout. Gulf countries have been wary of supplying aid to Lebanon due to fears the funds could be channeled to Hezbollah, an Iranian-backed militant group.

Other oil-market news

  • An unexpected demand boost for dirty fuel oil is poised to ease with the return of some OPEC+ crude supply from this month.
  • America’s most prolific shale drillers are accepting a fate once anathema to an industry obsessed with growth: drilling just to ward off production drops.
  • Libya plans to export just 1.2 million barrels in August, down almost 40% from July, as most of the OPEC member’s oil facilities remain shut amid a civil war.

--With assistance from James Thornhill.

To contact the reporters on this story:
Low De Wei in Singapore at dlow47@bloomberg.net;
Saket Sundria in Singapore at ssundria@bloomberg.net

To contact the editors responsible for this story:
Serene Cheong at scheong20@bloomberg.net
Ben Sharples, Andrew Janes

© 2020 Bloomberg L.P.



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