“The thought that crude can go lower for longer is definitely gaining a toehold here”.
US crude for October delivery traded early on Friday at $41.02 a barrel, while Brent oil was down 40 cents over Thursday at $46.22 a barrel. That’s the lowest PMI, a gauge of the strength of the manufacturing sector, since March 2009. Gasoline is averaging $2.63 a gallon, compared with $3.44 a year ago.
Saudi Arabia and its allies inside the group have already said they weren’t considering such moves. “The benefit of lower commodity prices, in general, is a tailwind for the global economy”.
Brent for October settlement was little changed at $48.80 a barrel on the London-based ICE Futures Europe exchange. Another familiar with the letter said that in conversation with other members, Algeria had pressed for closer cooperation with non-OPEC producers. Private-equity firms, which have amassed large energy-focused funds, could find buying opportunities among distressed producers.
The dollar fell on receding expectations of a U.S. interest rate rise in September, providing some support for oil. Many companies reported higher-than-expected production in their second-quarter earnings.
McGillian said that with WTI near $40, the risk/reward ratio in the market is starting to turn against production.
US crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government’s Energy Information Administration said.
WTI briefly fell below $US40 a barrel for the first time since February 2009, to $US39.86.
The US crude front September contract expires on Thursday and has seen intraday volatility as market participants exit their positions.
Welcome back to a world of sub-$40 oil.
Algeria is understood to have asked for urgent action, particularly on the oil production ceiling which governs the amount countries are allowed to produce.
“Supply is now outweighing demand by far”, Michael Poulsen, an analyst at Global Risk Management Ltd.in Middelfart, Denmark, said by e-mail.
Petroleum services firm Baker Hughes publishes the weekly report on active US oil rigs, which market-watchers see as an indicator of US crude production and demand. While U.S. crude stockpile data due Wednesday is projected to show a decline for a fourth week through August 14, inventories will remain more than 90 million barrels above the five-year average for this time of year. Iran’s nuclear deal with the West sets the stage for that country to flood the market with more oil and worsen the supply glut.