Oil price bounces from 2-month low

Brent crude has lifted from an inventories-inspired sell-off as the market awaits US jobs figures.

Oil markets rose on Friday, recovering some ground after a smaller-than-expected draw in US crude inventories triggered a sell-off the previous session, sending prices to two-month lows.

According to the Energy Information Administration, US crude inventories for the week ended July 1 fell by 2.22 million barrels, smaller than a 6.7-million barrel draw tipped by industry organisation American Petroleum Group.

Brent crude, the global oil benchmark, rose 0.6 per cent to $US45.41 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7 per cent at $US45.44 a barrel.

“We expect total US crude stock draws of around 9 million barrels across July, although there is potentially some downside risk to this figure given that the recent collapse in global margins has begun to bite in the US too,” said Energy Aspects, a London-based consultancy.

The pace of crude inventory decline is likely to abate further from September onward as autumn refinery maintenance begins, the firm noted.

Analysts said that the US inventory data overshadowed the drop in the country’s oil production of nearly 200,000 barrels a day versus the previous week.

“This most pronounced decline since the 2013 hurricane season was more than six times as high as the average since the beginning of the year,” Commerzbank said in a daily note, adding this appeared to have been “ignored” by the market.

The ample supply of gasoline also weighed on crude, even with the growth in passenger vehicle sales and seasonal high demand amid the US summer driving season.

In the US, gasoline stocks also saw a smaller decline last week than anticipated, fuelling concerns of an overhang.

Robust gasoline supplies are making it less profitable for refiners to produce more gasoline, and refinery utilisation unexpectedly fell last week. If refiners continue to run at lower rates and buy less crude oil, that could worsen the oversupply of crude, analysts say.

“Bearish price signals will depress supply in the second half of this year, but this will be in part offset by a large inventory overhang and softening consumption in the fourth quarter,” BMI Research said.

Market participants will now be watching US June non-farm payrolls data to be released later Friday.

Nymex reformulated gasoline blendstock — the benchmark gasoline contract — rose 0.3 per cent to $US1.37 a gallon. ICE gas oil changed hands at $US416.00 a metric ton, down $US8.00 from the previous settlement.

— Dow Jones newswires