Oil Prices Rangebound With Investors Concerned Over Economic Outlook

Benchmark crude oil prices remained rangebound last week, mainly below the $100/B mark, with investors keeping a wary eye on US and European debate over the need for a new round of quantitative easing. Adding to the gloomy outlook was unexpectedly weak economic data from China. However, a market floor was provided by reports that talks between Iran and the P5+1 governments over Tehran’s nuclear program are making little headway. Traders were also looking to gauge the impact that the recent fall in crude prices might have on OPEC policy, with ministers due to gather in Vienna to debate production levels on 14 June.

Despite the decline in crude oil prices, concerns remain that they are hampering the global recovery, which is again struggling to maintain momentum. Speaking in Kuala Lumpur on 5 June, International Energy Agency (IEA) Executive Director Maria van der Hoeven said $100/B crude is still a threat in a global economy that is again slowing down. “Let’s be honest,” Mrs van der Hoeven told reporters in Malaysia, “we still confront a situation of near triple digit oil prices. This is placing a huge burden on budgets and that’s contributing to the risk of further economic slowdown.”

In its Weekly Petroleum Status Report , released on 6 June, the US Energy Information Administration (EIA) said US commercial crude oil inventories decreased by 100,000 barrels from the previous week. At 384.6mn barrels, US crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 3.3mn barrels and are at the lower limit of the average range. Distillate fuel inventories increased by 2.3mn barrels and are at the lower limit of the average range for this time of year. Total commercial petroleum inventories increased by 6.8mn barrels.

US crude oil imports averaged about 9.0mn b/d during the week, down by 99,000 b/d from the previous week. Over the last four weeks, crude oil imports have averaged just under 8.9mn b/d, 111,000 b/d below the same four-week period last year. US crude oil refinery inputs averaged just under 15.5mn b/d during the week, 299,000 b/d above the previous week’s average. Total products supplied over the last four-week period have averaged about 18.6mn b/d, down by 2.0% compared to the similar period last year.

Settlement Prices For Benchmark Crudes ($/B)

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