Oil ends five-day losing streak as price near $70 draws buyers
Crude oil rose for the first time in six days before a US government report forecast to show reduced petroleum supplies in the world’s largest oil consumer.
Oil rebounded after its relative strength index slipped below 30 yesterday for the first time in three months, indicating prices have fallen too rapidly.
Petroleum inventories in the US, the world’s biggest oil-consuming nation, probably decreased for a second week, according to a Bloomberg News survey of analysts before an Energy Department report today.
“In the US, inventories are particularly high and consumption is slow but globally the market is fairly robust,” said Tobias Merath, Zurich-based head of commodity research at Credit Suisse Group AG.
“If we take the bigger picture this recent correction is overdone. We see this as a range-bound market between $70 and $80.”
Crude for October delivery rose as much as 55 cents, or 0.8pc, to $72.18 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.18 at 8:47am.
Yesterday, the contract fell $1.47, or 2pc, to $71.63, the lowest settlement since June 7. Brent crude for October delivery rose 64 cents, or 0.9pc, to $73.02 a barrel on the London-based ICE Futures Europe Exchange.
US petroleum stockpiles probably declined 450,000 barrels in the week ended August 20, based on the median estimate from 18 analysts surveyed.
Crude supplies are expected to have gained 300,000 barrels after three weeks of declines.
Yesterday, the American Petroleum Institute industry group said petroleum stockpiles rose 692,000 barrels to 226.2 million and crude supplies fell 1.85 million barrels to 356.8 million.
Further evidence that the US is sliding back into a recession will send New York oil below $70 a barrel, according to Stephen Schork, president of consultant Schork Group Inc.
“The market has declined in 13 out of the last 15 sessions and dollar volatility has dropped in accord,” Schork, based in Villanova, Pennsylvania, wrote in a report today.
“At this point, all it will take is one more disappointing headline and/or dollar strength. The bears would then be in a position for a run at the lows, mid $60s, seen in May.”