West Texas Intermediate or WTI crude has been in the doldrums recently. Today it rebounded from the lowest level in five months amidst the news that a report is expected that will show that U.S. fuel supplies actual shrank recently and the price that went southward were excessive. Whereas futures advanced by 0.9 percent in New York, the indicators for gasoline and distillate inventories fell slightly.
Earlier we had reported the last week that West Texas Intermediate oil fell to the lowest level in more than four months when it was expected that the U.S. has huge stockpiles of crude. Then Futures in New York sank as much as 0.6 percent which contributed to the week’s 3.3 percent decline as the U.S., the world’s biggest oil consumer stockpiled huge quantities of crude. Additionally, there was a report that Libya had started its productions from the oilfields that were shut due to protests.
Amidst the reports from the Energy Information Administration that the U.S. had huge quantities of crude reserves, the crude prices went down below $95 which was the lowest since June this year. There is still not much improvement in the price levels as crude’s relative strength index is below 30 for a fourth day which again is not a bright signal for oil companies that are looking for profits from oil production.
However, WTI recorded a slight growth in its December delivery which rose as much as 88 cents to $94.25 a barrel in electronic trading on the New York Mercantile Exchange; then to it is still traded at $94.16 at 9:40 a.m. London time. On the other hand, the contract dropped $1.25 to $93.37 yesterday which is the lowest from all standards since June 4 this year.
Market observers say that WTI has lost 5.4 percent in the past seven days. Its 14-day relative strength index yesterday fell to 25.9 which in fact is the lowest reading since June 2012 which can be of great trouble for oil producers. Some investors believe that crude prices are completely oversold, and people are sort of looking for the chance of a rebound within a few days.
According to the new estimates U.S. gasoline inventories probably decreased by 400,000 barrels in the week ended Nov. 1 which leaves close to 213.4 million in supplies which is the least since November last year. Similarly, distillate stockpiles that also include heating oil and diesel, in all probabilities have fallen by 1.5 million barrels to 121.2 million.
To contact the reporter of this story: Jonathan Millet at email@example.com