Oil futures wavered between slight losses and modest gains as traders prepared for the expiration of the West Texas Intermediate May contracts on the New York Mercantile Exchange and speculated that weekly inventory growth data in the US would show another increase.
Despite the changes, the benchmarks remain just below their 2015 highs supported by concerns that a civil war in Yemen could cause instability in the Middle East and affect the region’s crude output.
Light sweet crude for May delivery most recently edged down 21 cents or 0.4% to $56.17 a barrel on the New York Mercantile Exchange. The US benchmark was weighed down by analysts’ comments that the oil rally was unsustainable.
The June contract, which will now become the front month contract after the expiration of the May contract, dipped 11 cents or 0.2% to $57.77 a barrel.
The losses were however capped by the continuing conflict in the Middle East and a report by Vitol Group-the world’s biggest independent trader that the commodity was unlikely to go below the lows reported this year already.
“We still subscribe to the likelihood that over time prices still have to go back up again because you still need to invest,” Vitol’s Chief Executive Officer Ian Taylor said in an interview with Bloomberg at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday.
“People won’t invest unless they can make the upstream business work and it’s not just U.S. shale, at $50 a barrel it doesn’t work.”
Brent futures, the global benchmark, dipped 47 cents or 0.7% $62.98 a barrel on the London-based ICE Futures Exchange. The contract is now more than 15% up this month boosted by the conflict in Yemen and a slowdown in US production.
“Geopolitics is supporting oil at the moment,” Tamas Varga, analyst at London brokerage PVM Oil Associates, told Reuters.
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