Oil prices extend gains from previous session

At 1:45 PM EDT on August 5, the WTI crude oil futures contract for September delivery was trading at $41.56 per barrel, a drop of ~0.83%.

US oil stockpiles have decreased since hitting their April peak, but they remain near 30-year highs, and that continues to pressure prices.

For the first time since April the price of crude oil fell below $40 a barrel on Tuesday. Some analysts said that it would take time for the supply in crude oil to dissipate, allowing prices to recover. “Supply disruptions and risk appetite were supportive April-June, but fundamental headwinds are growing, which outnumber any recent positives”.

Official U.S. crude oil data for the week ending July 29 revealed that crude oil refinery inputs averaged approximately 16.852 million barrels a day. Genscape had estimated a small build.

Oil held near $42 a barrel amid speculation traders who had bet on a decline were buying back positions, after prices fell into a bear market earlier in the week.

Bloomberg carried out further surveys by interviewing analysts and asking them where they think oil prices will be at by 2017. Traders treated this news as a stale, one-time occurrence as buyers failed to react to the news. “These increase the chances of a production ramp near term, from 300,000 barrels a day to 600,000 barrels a day”, Morgan Stanley said on Wednesday, although it added that “longer-term (production) growth still looks challenging”.

Also supportive was Tuesday’s American Petroleum Institute report on US inventories, which showed a 1.34 million-barrel drop in crude stocks, although the decline was about in line with analyst expectations.

Crude nearly immediately bounced back, however, hitting new session highs as traders focused on a larger-than-expected 3.3 million barrel drawdown in gasoline inventories and a 1.1 million barrel fall in crude inventories at Cushing, Okla., the delivery point for Nymex futures, analysts said.

However, there was also an unexpected increase in crude reserves, which rebounded by 1.41 million barrels.