Weak fundamentals pull down oil prices after short-lived rally

“The oil market is intrinsically sensitive to economic and geopolitical developments around the world“. The move is seen as an attempt by the producer cartel´s kingpin Saudi Arabia to defend its market share as it fends off competition from US shale oil.

Also, the ban on oil exports kept oil stuck within U.S. borders. The bias is clearly bearish.

Societe Generale cut its third quarter forecast for WTI by $12.20 a barrel to $47.80 amid stable U.S. production and a surge in output from the Organization of Petroleum Exporting Countries, analysts including Michael Wittner said in a report last week. Gold prices were up 0.94%.

At 1323 BST, the Brent front month futures contract was down 1.71% or 86 cents at $49.55 a barrel, retreating from $50-level calls overnight.

The US Energy Information Administration will release the latest US stockpiles report for the week to August 7 on Wednesday. Prices earlier touched $48.24, the lowest since January 27. The basket represents the average price of Oman and Dubai sour grade crude and the sweet Brent crude processed in the Indian refineries in the ratio of 72:28.

“After six weeks of seemingly relentless selling, crude oil and refined products are attempting a rally this morning”, said TAC Energy in a note.

Chevron Corp. (NYSE: CVX) traded up about 2.4% at $85.717 in a 52-week range of $82.89 to $129.53.

However, the WTI/Brent spread has shrunk more dramatically since the collapse in oil prices. The trading day closed at $44,81/b. That was the lowest settlement since March 2009.

Global stocks markets mostly increased.

Yesterday, on August 4, the Chinese government held an emergency summit together with the leading financial experts in China.

Invesco Perpetual’s chief investment officer Nick Mustoe was one such manager to be vindicated during this period, saying a rebound was imminent, but now not so much following its recent falls. That is why more and more web sources keep on posting rumors and sneak pics of the would-be devices.

“Supply is likely to remain robust for the foreseeable future, prolonging the long awaited rebalancing of the global oil market”.

HONG KONG-Oil prices slipped on Tuesday as investors digested China’s decision to devalue the yuan, which will make imports of a number of commodities including crude oil more expensive.