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Oil Slide to Lowest Level Since March

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Crude-oil futures extended their slide Thursday as a persistent global supply glut, a strengthening dollar and concerns about China’s economy continued to throw a bearish pall over the market. “Record production levels by several OPEC members and Russia, multi-decade high production levels in the U.S., the strong dollar, expectations of increasing Iranian exports, and indications of decreasing fuel demands in China have combined to erase 85% of the market’s spring rally and indications that the market’s slump could be prolonged continue to drag oil prices lower,” said Derek Salvino, vice president for market research at Tradition Energy in Stamford, Conn., in a note.
On the New York Mercantile Exchange, West Texas Intermediate futures dropped 49 cents, or 1.1%, to close at $44.66 a barrel, its lowest settlement price since March.

Weekly data from the Energy Information Administration on Wednesday showed a fall in U.S. crude-oil inventories — usually a bullish sign of strong demand — but the positive effect was overshadowed by an increase in stockpiles of gasoline and other finished products.

Nymex reformulated gasoline blendstock—the benchmark gasoline contract RBU5, +0.16% —dropped for a second consecutive session. On Thursday it lost 2.27 cents, or 1.4%, to close at $1.6478 a gallon—the lowest close since February.

U.S. oil production, meanwhile, rose last week by 52,000 barrels a day to 9.5 million barrels a day.

“Shale oil producers are lowering costs swifter-than-expected, proving their superior competitiveness within the industry, and consequently surprising with resilient production,” said Norbert Ruecker, head of commodities research at private bank Julius Baer.

“Taking further into account that we are at the peak of the summer demand season and entering the shoulder autumn months, fundamental support to prices has softened but not to the extent the selloff implies,” he said.

Ruecker added that Julius Baer trimmed its forecasts for Brent prices to a range between $55-$60 per barrel “in the near term, but even lower longer term.”

Investors have also turned more bearish with Iranian officials asserting that they intended to quickly increase crude oil production, once the international sanctions are lifted following the nuclear deal with Tehran.