US oil prices steadied a bit on Tuesday after dipping below a barrel on Monday – for the first time since April – helped by a slight fall in the value of the dollar.
Crude oil broke the support level at $50 after a surprise climb in US inventory levels.
Subash Chandra, an oil analyst at Guggenheim Securities LLC in New York, said that the price in commodities is telling “the U.S. shale sector to shrink”, according to Bloomberg. In contrast, lower crude oil could support WTI prices.
The rig count data arrived a day after U.S. crude fell into bear market territory, with its $48.45 a barrel settlement off 21 percent from the June 10 close at $61.43.
On Thursday, West Texas intermediate crude oil futures fell more than 1% to settle near $48.55 per barrel in New York.
Data to be released by the U.S. government’s Energy Information Administration (EIA) at 1430 GMT on Wednesday is expected to shed further light on the build-up in inventories.
The US Department of Energy said US commercial crude stockpiles rose by 2.5 million barrels last week, while supplies at the closely-watched Cushing, Oklahoma hub added 800,000 barrels. The removal of sanctions will cover, among other things, all bans on Iran’s Central Bank, shipping, oil industry, and many other companies. Brent fell 36 cents to $56.68, a 0.6 percent loss.
After plunging since the summer of 2014 and hitting a low of about $43 in March, crude prices had been rising until recently on sharp production cutbacks both in the USA and overseas.
Excess supply is expected to persist with the Iran nuclear deal, which will bring Iran’s oil onto the market in a few months. And three delegates from members of the Opec speaking this month said the price drop was unlikely to last and Opec would not alter strategy, also citing expectations for stronger demand.
“The drop back into a bear market shows that the people who bought oil in the second quarter are realising the market is still oversupplied”, said Giovanni Staunovo, an analyst at UBS in Zurich.
The price for crude oil stayed consistent despite pessimistic predictions.
Demand this past week was mixed although total product demand did increase by 3.4%. The outage was supportive to Brent as oil from the field contributes to the calculation of the futures price.
