Wall Street Opens Lower as Oil Prices Drop

تم نشره في Mon 22 August / Aug 2016. 12:00 AM - آخر تعديل في Mon 22 August / Aug 2016. 09:02 PM
  • A street sign for Wall Street hangs in front of the New York Stock Exchange May 8, 2013. (Reuters)


LONDON/SINGAPORE — Oil prices fell nearly 3 per cent on Monday as China ramped up exports of refined products, US oil producers added rigs for an eighth consecutive week and prospects emerged for increased exports from Iraq and Nigeria.


Brent crude futures LCOc1 were down USD1.36 at USD49.52 a barrel by 1326 GMT, with US West Texas Intermediate (WTI) crude Clc1 slipping by USD1.16 to USD47.36.


China's July diesel and gasoline exports soared by 181.8 per cent and 145.2 per cent respectively from the same month last year, putting pressure on refined product margins.


Because of the production and storage overhang in fuel markets, Barclays said that this month's 20 per cent price rally is unwarranted and that oil prices of USD50 or higher are unsustainable.


"Oil prices will likely experience another short-term dip in the coming weeks," it added.


Adding to the bearish sentiment, US drillers added 10 oil rigs in the week to Aug. 19 as crude rebounded towards the USD50 mark that makes drilling viable.


"We expect the oil market next year to be somewhere between balanced and up to as much as 1 million barrels per day (bpd) in deficit," said Bjarne Schieldrop, chief commodity analyst at Nordic bank SEB.


Schieldrop said that the 32 rigs added in August would increase supply by close to 200,000 bpd through 2017.


Iraq's plans this week to increase exports of Kirkuk crude by 150,000 bpd from northern fields weighed on prices, traders said.


Also hitting sentiment was an announcement by a Nigerian militant group that it was ready for a ceasefire and dialogue with the government. The group has claimed a wave of attacks on oil facilities in the Niger Delta.


The restive southern swampland region has been rocked by attacks on oil and gas pipelines since the start of the year, reducing the OPEC member's output by 700,000 bpd to 1.56 million bpd.


A stronger dollar also pressured prices. The dollar index .DXY rose by 0.11 per cent, making commodities priced in the US currency more expensive for holders of other currencies.


Hedge funds and other large money managers have raised their weekly bets on rising Brent crude oil prices by the largest amount since records began in 2011, Intercontinental Exchange data showed.


Investors increased their net long positions by 63,792 contracts to 354,915 in the week to Aug. 16, the highest since mid-June.