Oil traded marginally lower pressured by market concerns over a global supply glut and indications that the world’s biggest producers would boost their crude output.
Crude prices were temporarily supported by weaknesses in the dollar against major currencies-falling to a four month low- and news that Iran’s Revolutionary Guard had fired at a cargo ship in international waters in the gulf.
The prices, however, resumed their fall on reports by the US Energy Information Administration that refinery activity in the US slowed by more than 1.8% last week.
This is the biggest decline in refinery activity in the US since January 16 causing fresh speculation that the oil prices will sustain a supply glut.
Also fueling the concern was reports by the International Energy Agency that members of the Organization of Oil Exporting Countries OPEC in the Gulf were boosting their crude output.
“The market is still trying to figure out what to make of yesterday’s refining number,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, told Bloomberg by phone.
“It changes the whole nature of the market because it was unexpected. Any decline would have been a surprise but this was the biggest we’ve seen since January.”
Light sweet crude for June delivery most recently traded $1.08 or 1.79% lower at $59.73 a barrel onj the New York Mercantile exchange.
The US benchmark, recovering from a six year low, has stalled at $60 a barrel in the recent past to fuel speculation that the prices are sustaining the oil supply glut.
“Prices seem to be going nowhere,” Daniel Ang, analyst at Phillip Futures, told the Wall Street Journal.
“The fight between oil bulls and bears continue, and it is difficult to pick a side.”
Brent futures, the global benchmark, most recently fell by 30 cents or 0.45% at $66.67 a barrel on the London-based ICE Futures Exchange. The June front month contract is set to expire later Thursday.
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