Crude oil prices extend losses for a second straight day as supply pressures build to pull markets further away from $50 per barrel. File photo by Monika Graff/UPI |
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NEW YORK, July 6 (UPI) -- Supply-side pressures returned for a second straight day to pull oil prices lower Wednesday, with $50 per barrel fading further away from view.
Crude oil prices moved sharply lower Tuesday in reaction to indications the U.S. crude oil market in the Lower 48 was recovering. Data last week from Baker Hughes showed more activity in shale basins in North America, which could add to some of the supply-side pressures that brought crude oil down from $100 per barrel two years ago.
Brent crude oil was down 0.8 percent at the start of trading in New York to open at $47.54 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, lost 0.5 percent from the previous session to start trading at $46.35 per barrel.
Oil prices recovered from below $30 per barrel in early 2016 as global economic recovery was strong enough to take on some of the excess supplies. A June decision by British voters to leave the European Union shook investor confidence, however, and brought renewed concerns about economic trajectory to the forefront.
Valdis Dombrovskis, the vice president for the European Commission, told leaders in Strasbourg the British referendum was regrettable.
"Managing the post-referendum process will require difficult economic and political decisions -- at a time when Europe also faces other important challenges such as migration and security," he said in a statement Wednesday.
Weaker crude oil prices may be acting as a de facto stimulus for consumers as retail prices remain at historically lower levels. Motor club AAA said U.S. holiday goers took to the roads in droves as gasoline prices touched a 10-year low. Over the short term, this could put positive pressure on crude oil prices, though AAA notes the holiday comes as major producers start to return to full service.
"Global oil prices continue to point lower thanks largely to indications of increased supply," it said in a weekly retail market report. "This includes the recent return of production from the Canadian oil sands and reports of strong output from OPEC member countries."
S&P Global Platts said in an emailed report higher consumer demand could put pressure on supply levels in the United States, though stock declines are likely still below the five-year average.
