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Oil prices higher ahead of US inventory data
[NEW YORK] Oil prices rose modestly on Tuesday as traders looked ahead to weekly US commercial inventory data that could shed insights into demand in the world's largest consumer of crude oil.
US benchmark West Texas Intermediate for September delivery closed at US$42.62 a barrel on the New York Mercantile Exchange, up 75 cents from Monday's settlement.
Brent North Sea crude for October, the international benchmark, spent most of the day in the red but managed to eke out a gain of seven cents, finishing at US$48.81 a barrel in London trade.
"There's not too much today to influence prices," said Matt Smith, director of commodity research at ClipperData.
Smith pointed to the WTI rebound ahead of the American Petroleum Institute's weekly oil data report, saying the consensus estimate was for a decrease of two million barrels in US crude inventories.
The API is scheduled to publish the report after the market closes Tuesday. The official weekly inventories report from the Department of Energy is due Wednesday.
Experts surveyed by Bloomberg News on average forecast the DoE would report that US crude-oil stockpiles had fallen by 750,000 barrels for the week ending August 14.
"Should we see a bearish build, that will send prices heading lower again, I should think," Mr Smith said.
Some analysts predict that will be the case. Carl Larry of Frost & Sullivan said he expected a slowdown in refinery usage and problems at a big refinery in Whiting, Indiana, would add to US crude inventories that are near historically high levels.
But Mr Larry said that WTI is bottoming out after falling about 30 per cent in the past two months.
"This US$40 area is pretty low, it's the lowest we've seen in quite a long time, since 2009, and I think that there's a little bit of room to go lower," he said, citing US$38 a barrel as the "worst case".
"We're not in a bad economy right now - when we talk about weak demand, we're talking about China or Europe, we're not talking about America," Mr Larry said.
BMI Research predicted the global supply glut would persist until 2018.
"The return of Iranian oil to market, coupled with strong project pipelines in North America, the Middle East, west Africa and Kazakhstan, will see global supply expansion outstrip the growth in global consumption for the next two years," it said.