Published: Sun, August 07, 2016
Economy | By Melissa Porter

Oil prices slip as USA dollar strengthens on jobs report

Although crude oil prices gained for two consecutive trading days amid a surprise drop in gasoline inventory levels, the higher crude oil inventory levels dented the sentiment in the crude oil market.

US crude oil inventories were at 522.5 million barrels as of July 29, a historically high level for this time of year, the EIA said.

US gasoline stocks dropped 3.26 million barrels to 238.2 million barrels last week, according to the US Energy Information Administration (EIA), against expectations for a draw of around 200,000 barrels.

Bloomberg carried out further surveys by interviewing analysts and asking them where they think oil prices will be at by 2017.

United States crude dropped below the $40 dollar mark for the first time since April on Tuesday, a day after the commodity sank into a bear market, with oversupply, weak demand and expectations of rising output sending prices tumbling over 20 per cent since June. Anthony Starkey, a lead manager at Platts Analytics, cautioned against too much optimism in weekly figures, noting that production in the Lower 48 actually remained flat, marking the first time since early March that production didn't drift lower.

Brent crude was down 53 cents, or 1.2 percent, at $43.76 per barrel by 9:54 a.m. EDT (1354 GMT). The price of USA crude dipped under $40 this week for the first time since April.

Oil prices rose more than 2 percent on Thursday, with US crude advancing firmly above the $40-per-barrel mark on short-covering and after a modest stockpile drop at the delivery hub for USA crude futures.

In a sign of glutted markets, Singapore's light distillates stocks are around 15 million barrels, up from 13 million barrels in late June, and close to record levels. A supply glut that has weighed on prices could increase if oil exports actually restart from ports in Libya that have been closed since 2014. Domestic crude oils priced in the Midwest and western Texas are no longer heavily discounted relative to imported crude oils priced in the North Sea.

However, the gains came after both contracts had fallen into a bear market, having lost 20 percent from recent highs above the $50 seen in early June. Any price improvement above $45 a barrel could attract US producers as they are desperately waiting for prices to stabilize at around that level.

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