Oil falls below $72 on stronger dollar
Crude prices fell below $72 today on a slightly stronger U.S. dollar, reversing earlier gains of as much as 0.6 per cent boosted by forecasts of a second weekly fall in U.S. inventories.
Prices tracked volatile equities in the past two days, paring gains on Tuesday after a report from the Institute for Supply Management (ISM) showed a slowdown in the U.S. service sector. But the expected tightening of U.S. crude and gasoline supplies allowed oil to shrug off falling Asian equities on Wednesday.
U.S. crude for August fell 24 cents to $71.74 a barrel by 0706 GMT on Wednesday after advancing as much as 40 cents to $72.38 a barrel earlier. ICE Brent for August fell 25 cents to $71.20.
“Yesterday’s non-manufacturing data fell more than expected, so investors have a wait-and-see approach,” said Serene Lim, a Singapore-based oil analyst with ANZ.
“The market is pricing in a drop in crude inventories, but if inventories fall less than expected, we might see prices falling.”
U.S. crude stockpiles probably fell 2.6 million barrels in the week to July 2, a Reuters survey showed on Tuesday, as imports may have dropped for a second straight week.
Gasoline inventories were forecast down 300,000 barrels on average, following a surprise modest build in the prior week, while supplies of distillates, including heating oil and diesel, probably posted their sixth straight weekly increase, adding 1.5 million barrels.
The American Petroleum Institute will publish weekly inventory data on Wednesday at 2030 GMT, followed by government statistics from the Energy Information Administration (EIA) on Thursday at 1500 GMT. Both reports come a day later than usual because of the independence-day holiday on July 5.
Reuters
Source – The Citizen