crude oil futures news

crude oil futures news

June 2nd, 2016

Crude oil prices were flat to weaker in early Asia on Friday with investors noting the bearish unchanged OPEC production ceiling, but also looking ahead to demand prospects.

On the New York Mercantile Exchange, WTI crude for July delivery was down 0.02% to $49.16 a barrel.

Overnight, crude futures inched up on Thursday, reversing territory late in the session, as a sharp decline in U.S. crude inventories offset a widely expected decision by OPEC to leave its production ceiling unchanged.

On the Intercontinental Exchange (ICE), Bent crude for August delivery wavered between $48.86 and $50.30 a barrel, before closing at $50.00, up 0.28 or 0.55% on the day.

Crude prices hit session-lows on Thursday after OPEC ended its semi-annual meeting in Vienna without making any adjustments to its production ceiling. It came amid bullish comments from Saudi Arabia, which attempted to soothe investor sentiments by pledging not to flood markets with a glut of supply in the coming months. At the same time, Iran offered few hints that it will enact any controls to slow production as it attempts to return to pre-sanctions levels from 2007 before the end of the summer.

Oil has fallen sharply from its level two years ago when it peaked at $115 a barrel. In November, 2014, OPEC roiled global energy with a strategic decision to maintain its production ceiling above 30 million barrels per day. The controversial tactic purportedly aimed at crowding out higher-cost U.S. shale producers, which increase their profit margin when the price of oil exceeds $60 a barrel.

While Saudi Arabia, Russia and two other major producers agreed on the framework of a comprehensive production freeze in February, the price of oil has rebounded by nearly 80% ever since, eliminating the need for such a deal. On February 11, the front month contract for U.S. crude plummeted to $26.05 a barrel, its lowest level in 13 years.

“The worst is over for oil,” Qatar energy minister Mohammed al-Sada said at a news conference following the completion of the meeting. “There was consensus that market fundamentals are working and there wasn’t pressure on OPEC to think about influencing supply and demand.”

Oil prices, though, rallied on Thursday after the U.S. Energy Information Administration (EIA) said commercial crude oil inventories decreased by 1.4 million barrels for the week ending on May 27. At 535.7 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Any significant draws in crude stockpiles nationwide are viewed as bullish for oil, as domestic inventories continue to remain near full storage capacity.

Total motor gasoline inventories decreased by 1.5 million barrels for the week, while distillate fuel inventories declined by 1.3 million barrels. Last weekend’s Memorial Day holiday marked the official start of the summer driving season.

OPEC also named Mohammed Barkindo of Nigeria as Secretary-General at Thursday’s meeting. OPEC meets next on November 30.