Crude prices edged lower on speculation that the global glut will persist and concerns of weak demand as China stepped up to boost its economy.
Last Week WTI oil recorded its 8th straight weekly gain while Brent snapped four straight weeks of gains to fall on speculation that the hurricane season was starting.
The market responded to these price gains by a rise in the oil rigs in the voluminous Permian shale for the first time in months last week.
“There’s extra oil in the Atlantic basin,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, told Bloomberg by phone.
“There are North Sea cargoes floating around and a large number from Nigeria. We’re also seeing some oil get out of Libya even with the chaos in the country.”
Light sweet crude for June delivery gained 14 cents or 0.2% to close at $59.57 a barrel on the New York Mercantile Exchange. The US most active contract advanced 0.4% last week to build on April’s 25% advance.
Brent Futures, the global benchmark, slipped 48 cents or 0.7% to end the day at $64.91 a barrel on the London based ICE Futures Exchange.
The weakness in oil prices was also caused by investor concern over the outlook for demand on weaknesses in China’s economic growth. Over the weekend China, the world’s biggest consumer of oil, announced that it was slashing its interest rates in an effort to revive the economy.
“China’s economy is slowing but they are buying oil like it’s going out of style,” Phil Flynn, senior market analyst at Price Futures Group, told Market Watch.
“We have said that oil demand would exceed expectations with global economic stimulus and that is exactly what is happening,” he added.
“China cut rates by a quarter point over the weekend for the third time in the last 6 months to combat a slowing economy, yet they also imported a record 7.4 million amount of oil last month—passing the United States as the world’s biggest oil importer.”
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