Oil prices dropped today as the market began focusing on long-term bearish factors after prices increased in the earlier session as US crude stocks dropped to the lowest level in almost four years.
US West Texas Intermediate (WTI) crude futures stood at $68.70 per barrel, recording a drop of 26 cents from the previous level, reported Reuters.
Brent crude futures touched at $73.15 per barrel, witnessing a drop of 30 cents from the earlier session.
Energy Information Administration (EIA) data revealed that inventories at the Cushing storage facility in Oklahoma fell by 1.3 million barrels. This is considered to be the lowest level since October 2014.
Petromatrix managing director Olivier Jakob was quoted by the news agency as saying: “Trade volume is pretty low in futures today. Yesterday you had a strong rebound supported by Cushing but there’s not a lot else that is driving prices higher so we are seeing a bit of a correction.”
Low stocks are still providing support to the prices despite last week’s rise. Total US crude inventories are currently below the five-year average of around 420 million barrels.
WTI is almost touching a flat week after witnessing four weekly drops, while Brent seems to be on track to record a fourth week of declines, recording a drop of 1.4%.
According to analysts, the outlook beyond the short-term was turning bearish.
Reuters technical commodities analyst Wang Tao said: “Bulls are fighting a losing battle…Brent oil may fall to $67 per barrel.”
In July, Russia’s oil production grew by 150,000 barrels per day (bpd) from the previous month to reach 11.21 million bpd.
Production of Saudi Arabia also increased recently, to reach around 11 million bpd, while US output is consistent.
Russia, Saudi Arabia, Kuwait and UAE have increased output to offset an expected drop in Iranian crude supplies, following US sanctions later this year. However, a complete halt of Iranian supplies is not likely given that China, which is the biggest customer of Iran, has not accepted US request to reduce imports.