Oil steadies, but month for WTI is worst in a year

Oil futures were poised Friday to mark their third-monthly loss of the year, with West Texas Intermediate crude officially entering a bear market as lingering concerns about oversupply and a deluge of refined products triggered a selloff.

But the rise in recent months has led them to reopen the rigs as they become more cost-effective.

Oil prices are down almost 18% since peaking above $50 in early June, as high inventories of gasoline products cloud the future outlook for crude. It’s set for a seventh session loss in a row, the longest losing streak since January. Brent crude was trading at $42.72 per barrel-a drop of ~1.2%.

Friday’s losses came as fears of a persistent oversupply in the oil markets have been rekindled by a gasoline glut world-wide, as well as by early signs of increasing production in the US and among members of the Organization of the Petroleum Exporting Countries. For the month, the contract finished down 14 per cent, the biggest decline for a WTI front-month since July 2015. The weakness intensified this week after the U.S. Energy Information Administration reported that the crude oil inventories rose by 1.67 MMbbls (million barrels) in the week ending on July 22. Companies were forced to shut installations earlier this year as prices sank to near 13-year lows below $30.

“We are maintaining a bearish posture while at the same time suggesting that additional crude price declines of around $4 a barrel from current levels could require a few more weeks”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.

U.S. Gross domestic product climbed by 1.2 percent in the second quarter following a downwardly revised 0.8 percent increase in the first quarter. The ICE dollar index DXY, -1.01% was down 1%. It was on track for a monthly loss of at least 15%, the biggest in a year.

International Brent crude oil futures were trading at $42.51 at 0617 GMT, down 19 cents, or 0.4 percent, from their previous close, the lowest since April. The August contracts expire at the day’s settlement.