Another supply challenge to watch is shale drilling in the U.S. Despite the plunge in oil prices, drillers have been stubborn about cutting production.
Analysts have differing opinion with regards the behavior in which prices of crude and oil are showing.
U.S. crude inventories fell by 2.4 million barrels last week to 459.7 million, the American Petroleum Institute said late on Tuesday, compared with analysts’ expectations for a decrease of 1.5 million barrels. The days when crude oil is worth more than $140 a barrel may be behind us, but a recovery is inevitable.
The huge overcapacity and under-demand persists and there are no signs that the situation will change for higher oil prices and there by an increase for the bunker prices.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September slumped to $49.02 a barrel from $52.69 a week earlier.
Oil prices plunged into a bear market last month and are off more than 50% from previous year.
Oil prices on global markets sank to six-month lows yesterday ending the trading session just a few cents above the US$45 a barrel on which the T&T national budget is pegged.
September West Texas Intermediate crude CLU5, -2.04% on the New York Mercantile Exchange added 57 cents, or 1.3%, to end at $45.74 a barrel.
PRECIOUS METALS: Gold fell further, while platinum and palladium struck multi-year low points. “The U.S. has (cheap) crude supply and can keep runs high but the rest of the world is not looking so good …”
“The market is very much in wait and see mode ahead of today’s U.S. labor market data”, said Kash Kamal, analyst with Sucden. While lower oil prices typically translate into economic growth and consumers with more purchasing power, data from the United States showed that consumer spending rose at its slowest pace in four months in June.
Having busted through $44 a barrel, the new question is when does WTI break through the $40 floor.
RUBBER: Prices declined mainly on concerns about falling Chinese demand, traders said. Given the trajectory oil is on, $2 a gallon at the pump isn’t even out of reach before the summer is out.
The bounce came as a weaker dollar took the pressure off commodities which tumbled on Monday, with a global commodities price index sinking to a 12-year low.