Crude Oil Market Volatility
Crude oil futures experienced a day of little change in prices amidst volatility in Thursday’s session. Prices exhibited fluctuations above and below the flatline following a notable surge the day before. This rise was catalyzed by a larger-than-expected drawdown in U.S. crude inventories. However, such positive news was somewhat mitigated by increases in gasoline and distillate stocks.
Market Analysis and Expert Insights
Despite a significant 4.9 million barrel drop in U.S. crude stocks, sluggish U.S. gasoline demand prevented oil prices from climbing higher, as noted by John Kilduff of Again Capital in an interview with Reuters. Kilduff expressed concerns about a slowing economy potentially leading to a softening in crude oil demand.
Furthermore, Wednesday saw gains in crude oil prices following a bounce off technical support levels. Peter Cardillo of Spartan Capital, cited by Dow Jones, remarked that despite the build-up in oil products, decreasing crude stockpiles laid the groundwork for prices to rebound and test the mid to upper $80 range.
The anticipated interest rate cut by the U.S. Federal Reserve in September is also boosting crude oil prices. However, the market’s bullish sentiment is dampened by ongoing worries about economic growth in China, the largest importer of crude oil globally.
Price Movements and Future Projections
In specific figures, front-month Nymex crude for August encountered a slight drop to $82.82 per barrel, while front-month September Brent added $0.03 to reach $85.11 per barrel.
WTI Futures and Inventory Trends
The premium for front-month U.S. crude oil futures over the second-month contract widened to its highest level since October, according to a report by Reuters citing LSEG data. This increase is believed to be fueled by the previous week’s decline in crude inventories at the Cushing delivery point, dropping to a three-month low.
Analyst Giovanni Staunovo from UBS mentioned to Reuters that the growing backwardation signifies that market participants anticipate further inventory reductions in Cushing. In a report, the U.S. Energy Information Administration stated that crude stocks at the Cushing hub, excluding strategic petroleum reserve barrels, fell by 875,000 barrels to 32.66 million in the week ending July 12 – marking the lowest level since April.