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July 26, 2016

Oil prices recoil ahead of API, Dollar sinks ahead of FED.

Oil prices recoil ahead of API, Dollar sinks ahead of FED.

Crude saw modest rebound on Tuesday during the Asian trading session after bearish forecasts sent prices deeper on Monday and now investors are waiting for the estimate of oil reserves in the United States.

Today, the American Petroleum Institute (API) will release its weekly estimate of crude oil reserves and petroleum products in the United States. The report certainly won’t be passed unnoticed producing some good volatility on UK and US Oil benchmarks as traders are desperately looking for new catalysts for growth or downward breakout.

On the NYMEX WTI futures for September delivery rose 0.21% to $43.22 a barrel. On the ICE Futures Exchange Brent oil with settlement in October rose 0.29% to $45.26 a barrel.

Yesterday oil prices fell sharply to its lowest level in three months due to angst consumption fails to keep pace with supplies growth and strengthening of the greenback

At the weekend, analysts at Morgan Stanley have issued serious warnings about oversupply of oil products as gasoline stocks rose to the highest level in five years. Last week gasoline reserves increased by 0.91 million barrels, distillates stockpiles jumped by 4.1 million barrel what became the biggest increase in more than five months. Recent trends have heightened fears that refineries will reduce the pace of purchases of oil in the next few weeks, triggering a drop in oil prices.

“The demand for crude oil is lower than demand for petroleum products for the first time in three years — Morgan Stanley analysts wrote. -Refineries — real oil consumers, and oil demand is more important to balance the oil market than demand for petroleum products. Given the glut at the oil products market, reducing the margin of oil refineries and changes linked to economic cycles, we expect that the demand for crude oil will fall in the next few months.”

As a result, analysts predicted that demand for oil will increase by 625K barrels per day in 2016. It is much smaller than the International Energy Agency forecast of consumption growth by 1.3 million barrels per day. WTI oil rose from its lowest for 13 years of $26.05, which it touched in mid-February, partly due to signs that the imbalance between supply and demand began to decrease.

Investors were pricing in the news from Libya, where the Commander “Libya Petroleum Facilities Guard”, Ibrahim Dzadran said that the guard is ready to stop the prolonged blockade of three key ports of the North African country.

DXY declined 0.23% to 97.06 ahead of FED meeting in Wednesday as traders flee from US Dollar ahead of uncertainty related to FED comments toward further monetary policy. Pound tumbled 0.50% despite Dollar weakness as traders cut their exposure in risk assets.

 

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