Oil settles slightly higher, snapping 7-session drop

Oil settles slightly higher, snapping 7-session drop

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U.S. oil futures settled higher on Wednesday for the first time in eight sessions, but the move lacked conviction as U.S. government data showed that supplies of crude and crude products climbed last week and analysts continued to weigh the likelihood of a price drop toward $20 a barrel.
February West Texas Intermediate crude CLG6, +0.23% settled at $30.48 a barrel on the New York Mercantile Exchange, up 4 cents, or 0.1%. Prices had dropped as low as $29.93 Tuesday. Year-to-date, it’s fallen roughly 18%.WTI clearly seems to bounce when it nears $30, but “I wouldn’t take that as a signal that $30 is the bottom,” said Robbie Fraser, commodity analyst at Schneider Electric.
February Brent crude LCOG6, -0.86% on London’s ICE Futures exchange fell 55 cents, or 1.8%, to $30.31 a barrel. That was its eighth straight losing session and lowest settlement since April 2004. Brent briefly dipped under $30, ahead of the February contract’s expiration on Thursday.
“Oil inventories keep growing,” said Charles Perry, chief executive officer of energy-consulting firm Perry Management. “It will be some time before worldwide production will drop enough to bring supply down enough to balance it with demand.”
Perry expects WTI oil prices to drop to the low $20s this year, even if supply and demand conditions are unchanged.
On Wednesday, the U.S. Energy Information Administration reported that crude inventories climbed by 200,000 barrels for the week ended Jan. 8. Analysts polled by Platts expected supplies to be up 2 million barrels, but the American Petroleum Institute reported a 3.9 million-barrel decline on Tuesday.
John Macaluso, an analyst at Tyche Capital Advisors, said he believes that any strength in oil prices “should be sold into until the fundamentals and supply significantly change.”
“We expect to see continued builds in oil, which is customary to this time of the year,” he said.
Gasoline supplies increased by 8.4 million barrels, while distillate stockpiles added 6.1 million barrels last week, according to the EIA. Analysts at Platts were looking for a much smaller increase of 1.5 million for gasoline and expected distillates to have declined by 1.2 million barrels.
U.S. oil production, meanwhile, inched up by 8,000 barrels a day to total 9.23 million barrels a day, EIA data showed.
February gasoline RBG6, +0.45% fell 3.2 cents, or 1%, to $1.053 a gallon, while February heating oil HOG6, -0.54% ended at 96.9 cents, down 2.1 cents, or 2.1%, after settling under $1 Tuesday for the first time since 2004.
Also on Nymex, February natural gas NGG16, +0.13% added 1.1 cents, or 0.5%, to $2.268 per million British thermal units ahead of the EIA’s weekly supply update Thursday.
The International Atomic Energy Agency is expected to issue a report Friday revealing details on the progress of the Iranian nuclear deal, said Macaluso.
The market expects sanctions to be lifted soon. “This could put substantial further pressure on oil prices,” Macaluso said. “In this ‘falling knife’ environment in oil, the trend is your friend and bottom pickers continue to get crushed.”
Persistent oversupply has battered oil prices for nearly two years and fresh concerns about China’s economic health have heightened concerns about demand for the world’s crude oil.
China’s latest trade figures for December, however, shows a slight improvement in export growth which analysts say, could signal a rise in oil demand. – Marketwatch via Google

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