Oil prices edge away from three-month lows, but mood remains bearish

USA crude prices fell on Tuesday, hitting three-month lows, on renewed worries of a glut while Brent settled higher due to its better fundamentals versus US crude.

WTI for September was down 42 cents at $42.71. Six losing sessions out of the past seven have sunk it to its lowest settlement since April 25.

Global benchmark Brent was trading at $44.70 a barrel at 14:02 GMT, down 2 cents.

Gold rose as the US dollar slipped ahead of a two-day Federal Reserve policy meeting, which will be closely watched for clues on the outlook for USA interest rates.

USA drillers added oil rigs for a fourth consecutive week. “It will be hard to find investors that are willing to go long”, said an analyst from Barclays. This signals that the USA production declines are getting closer to an end, which is another negative factor for oil prices. I had also stated that the above factors (combined with strong United States dollar) will further affect the prices in the coming weeks. Brokers are mostly expecting demand for crude to remain limited.

Analysts expected gasoline inventories to have gone up by 675,000 barrels in the reporting period and distillate fuel stockpiles to have gained 700,000 barrels.

“Crude oil markets have been under pressure as oil supplies have started growing with the resumption of output from the capacity lost due to wildfires in the Canadian oil sands”, EY oil and gas head Sanjeev Gupta said in a note, referring to blazes that hit the country’s key oil fields.

“The theme of a product glut continues to send shivers through the crude complex”, said Matt Smith, director of commodity research at ClipperData. It’s rallied more than 8 per cent in the past month.

Market intelligence firm Genscape pointed to an inventory rise of 1.1 million barrels at the Cushing, Oklahoma, delivery point for USA crude futures in the week to July 22.

USA stockpiles were at 519.5 million barrels in the week ended July 15, more than 100 million barrels above the five-year average, according to data from the Energy Information Administration. This Monday, both WTI (WTI) and Brent were trading at $43.76 and $45.28 at the time of writing this article.

That is especially important now because of how central oil has been to financial markets for the past two years, said John Saucer, vice president of research and analysis at Mobius Risk Group in Houston.

Gasoline RBc1 was slightly higher at $1.3358 a gallon.