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Oil prices drift lower on supply data

Downturn could be erased as market digests latest move on possible production freeze.

By Daniel J. Graeber
Crude oil prices tick modestly lower in early Thursday trading as investors mull over data showing a market drifting back toward the supply side. File photo by Monika Graff/UPI
Crude oil prices tick modestly lower in early Thursday trading as investors mull over data showing a market drifting back toward the supply side. File photo by Monika Graff/UPI | License Photo

NEW YORK, Aug. 25 (UPI) -- Crude oil prices continued to drift lower in early Thursday trading in response to higher volumes of storage, though OPEC rumors may once again thwart declines.

Oil prices moved sharply lower in Wednesday trading after a report from the U.S. Energy Information Administration added to bearish market sentiments. Data show U.S. crude oil inventories hit a record level after a larger-than-expected increase. Adding to that were indications that consumption was on the decline.

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A growing gap between supply and demand fueled a move in crude oil prices to below $30 per barrel this year and seasonal patterns in the latter half of 2016 may indicate a return to a market favoring the supply side.

Analysis emailed from S&P Global Platts said markets are not "happy" about the latest trend toward the supply side.

The price for Brent crude oil lost 0.2 percent from the previous close to start the day at $48.95 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 0.3 percent to open at $46.62 per barrel.

Markets started lower Tuesday, but rebounded by more than a full percent on reports Iran was moving in support of pricing actions possibly under review for a meeting of oil-producing nations in Algeria next month. Iran's oil minister on Thursday reportedly put the meeting on his itinerary, though his position on early 2016 considerations was mixed at best.

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"Even assuming that the discussion resulted in an agreement and that OPEC production theoretically froze at July levels, the market is not expected to see any real relief in the immediate future," Anthony Starkey, a manager at Platts, said in a statement.

Further support for a gain in crude oil prices could emerge from the development of a low-pressure system moving west toward Florida and potentially the U.S. Gulf of Mexico. A hurricane in the area could curb regional crude oil production, though a storm-tracking system maintained by British energy company BP so far shows no action taken.

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