Asian markets mostly down on oil concerns

Oil prices for Brent crude oil have been hovering around $45 a barrel, reaching almost $49 per barrel just prior to the Fourth of July holiday weekend.

Despite finishing in positive territory on the day following a surprisingly upbeat U.S. jobs report, the crude oil future’s market cratered this week suffering a weekly loss of more than 7% – the largest retreat in the commodity’s value since early February.

“There seems to be a natural limit on the price, because these companies are scrambling to generate cash”.

Money managers, including hedge funds and other big speculators, cut their combined net longs in U.S. crude futures and options in both NY and London by 6,732 contracts to 172,258 contracts in the week to July 5, data from the U.S. Commodity Futures Trading Commission showed.

USA crude inventories posted a smaller than anticipated decline last week after falling by just over 2 million barrels.

Crude prices edged down in early Asian trade on Monday to hold near two-month lows on seasonally weak consumption, despite comments from the Saudi Arabian oil minister that the oil market was becoming more balanced. Western Digital stock rose $2.14, or 4.7 percent, to $47.60 and competitor Seagate Technology gained 48 cents, or 2 percent, to $24.

“Uncertainties and concerns over how Brexit will influence the market is expected to last for a long time, increasing volatility in oil prices”, Will Yun, commodities analyst in Seoul, South Korea, told Bloomberg. It shed $2.40, or 4.9 percent, to $46.40 a barrel in London on Thursday.

US crude inventories dropped a seventh week to 524.4 million barrels, the lowest since March 11, according to EIA data.

ENERGY: Oil prices fell after the Energy Information Administration said stockpiles remained historically high and didn’t decrease by as much as investors expected. That was the biggest percentage loss for Brent in a day since February 9.

“Trouble was brewing in the oil trade [with] poor support for prices in much of the session”, Richard Hastings, macro strategist at Seaport Global Securities, told Marketwatch.com.

With Nigerian and Canadian oil production gradually returning and gasoline stocks at levels sufficient to meet summer demand, the market is looking more neutral to bearish in the near term. ADP’s estimate is based on private companies, and the US government will release its own hiring report on Friday.

At 524.4 million barrels, U.S. crude oil inventories are at historically high levels for this time of year, the DoE noted.

Futures traded between $45 and $51 a barrel in June after nearly doubling from a 12-year low in February amid supply disruptions and falling US output. Distillate (diesel fuel, heating oil) stocks are 8.4% higher than at the same time previous year.

The hiring spurt marked a sharp improvement from May’s dismal showing, when just 11,000 jobs were added.