Crude oil biggest monthly loss since December 2015
Oil prices fell to their lowest levels since April on Friday, with Brent on track for its biggest monthly loss since December 2015, pressured by slowing economic growth that threatened to increase a supply overhang of crude and refined products.Brent crude oil futures were trading at US$41.89 by 0908 GMT, down 81 cents, their lowest since April. The benchmark was poised for a monthly loss of more than 15.5 per cent, its biggest since December 2015.
U.S. West Texas Intermediate (WTI) crude fell 54 cents to US$40.60 a barrel, slipping below US$41 for the first time since April. It was on track for a roughly 16 per cent monthly loss, the biggest in a year.
Both crude benchmarks are now down around 20 per cent since their last peak in June.
The glut in the market has taken the edge off supply disruptions in Libya and Nigeria, particularly as high stocks of oil products had cast doubt on refinery demand.
"Doubts are rife as to whether the oil supply imbalance is indeed slowly drawing to an end," Stephen Brennock of oil brokerage PVM, said.
"Oil prices should eventually resume their upward journey but it will be a subdued affair with the huge stock overhang tempering gains until the end of next year at the very least," he said.
Cheap crude has led refiners to produce lots of refined products, which has pushed down margins in the Americas, Europe and Asia this year, eroding revenues for oil producers and refiners like Royal Dutch Shell, which this week reported a big drop in earnings.
Benchmark Singapore refinery margins are down 60 per cent from their January highs to US$4.28 per barrel. Italian oil company ENI said on Friday that its standard refining margin in the second quarter was roughly half the level of last year at just US$4.60 per barrel.
"Margins remain on a negative trajectory ... This seems a clear signal that Atlantic Basin refined product markets are currently oversupplied," Jason Gammel of U.S. investment bank Jefferies said on Friday.
On the supply side, Iranian exports to Asia's main buyers - China, India, Japan and South Korea - jumped 47.1 per cent in June from a year ago to 1.72 million barrels per day, the highest levels in over four years.
The sales jump is the latest sign that Tehran's aggressive moves to recoup market share, lost under international sanctions, are paying off.
Because of ongoing oversupply, U.S. bank Goldman Sachs said this week that it did not expect a big recovery in prices any time soon.
"We continue to expect that oil prices will remain in a US$45 per barrel to US$50 per barrel trading range through mid-2017 with near-term risks skewed to the downside," the bank said. |
