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Crude Oil Edged Lower In Early Thursday

Oil Prices, SON; Qua Iboe Crude Oil
Posted: Jun 9, 2016 at 1:47 pm   /   by   /   comments (0)

Oil prices edged lower on Thursday as traders took profits after three sessions of gains, though prices remained close to their highest this year thanks to a fall in U.S. crude inventories and supply disruptions.

International Brent crude oil futures traded 13 cents a barrel lower at $52.38 a barrel at 0845 GMT, after setting a 2016 high of $52.86 a barrel earlier in the session. U.S. crude fell by 5 cents a barrel to $51.20 after also hitting a new 2016 high at $51.67.

“While we’re above $50 a barrel, momentum still remains fairly positive and what we’ve just seen today is a little bit of profit taking after three consecutive days of gains,” CMC Markets chief market analyst Michael Hewson said.

Oil prices gained ground after data on Wednesday from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks last week fell 3.23 million barrels to 532.5 million, the third consecutive weekly fall.

“Lower than usual Canadian flows have helped fuel the draw in … stock,” consultancy Energy Aspects said.

“We estimate Canadian output losses will total 29 million barrels across May and June, after adjusting for turnaround work that was underway before the wildfires broke out, and assuming a pre wildfire utilisation rate of 85 percent of (the 2015 average),” it said.

A weaker dollar is also supporting oil prices traders said. The dollar is down about 2.4 percent this month against a basket of currencies, making dollar-traded fuel imports for countries using other currencies cheaper.

But some analysts said there were also signs that the recent oil price rise, in which Brent has rallied 6 percent this month and prices have virtually doubled since February to one-year highs, may be overblown.

Traders also warned of an ongoing build up of refined product stocks in the United States and Asia.

With fundamentals both for and against higher prices, many traders and analysts say a price of $50-60 per barrel may be fair value for oil. This is reflected in Brent’s forward curve, which stays within that range until early 2021.