Crude Futures Move Above $71 Ahead of Supply Data

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"There is a tug of war between the fundamental traders which clearly shows weak demand and continue rising inventories. . ."

Oil futures fell Wednesday after the government reported a build in crude supplies at a key delivery point.

Crude for September delivery dropped 78 cents, or 1.1%, to $70.67 a barrel on the New York Mercantile Exchange.

The contract hit an intraday low of $69.71 a barrel on Globex after the Energy Information Administration said that crude supplies increased by 1.7 million barrels during the week ended July 31. Analysts surveyed by Platts expected a rise of 1.5 million barrels.

Crude oil inventories at the Nymex futures contract delivery point in Cushing, Okla., rose by 1.2 million barrels to 33.3 million barrels, the government said.

The EIA numbers were "bearish," especially the build at Cushing, said Tariq Zahir, managing member of Tyche Capital Advisors, LLC.

"There is a tug of war between the fundamental traders which clearly shows weak demand and continue rising inventories, and the economic recovery and dollar weakness traders," Zahir said.

"If we see the equity market pull back a little and the jobs report coming out on Friday approaching the dreaded 10% number, we expect to see some profit-taking and the war to be won by the fundamental traders in the energy markets."

The EIA also said that gasoline stocks fell by 200,000 barrels and distillate inventories dropped by 1.1 million barrels last week.

Analysts polled by Platts expected a decline of 2 million barrels in gasoline supplies and a build of 1.1 million barrels in distillate stocks.

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