Oil retreated below the $60 a barrel mark on Friday as crude’s recent weakness slump continued unabated.
A mildly bullish mid-term outlook from the International Energy Agency did little to lift sentiment.
The IEA, the energy watchdog of the developed world, said it expected global oil demand to rise by 1.7 per cent next year as economic activity is rekindled, with demand coming mainly from developing economies.
Wednesday’s US inventories data showing large increases gasoline and distillate inventories continued to drag on the market.
At a time when demand for distillates historically should be high due to seasonal factors the data showed stocks of heating oil and diesel hit their highest level in almost a quarter of a century.
Analysts at Commerzbank pointed out that the negative US data was likely to put pressure on US West Texas Intermediate prices compared to Brent crude, which is the European benchmark.
A day before the one year anniversary of West Texas Intermediate hitting an all-time high above $147 a barrel, Nymex August West Texas Intermediate fell 77 cents to $59.61 per barrel. ICE August Brent crude lost 74 cents to $60.36 a barrel.
Tom Pawlicki of MF Global pointed towards the stream of bearish economic news as crucial to recent price movements, but said he expected the oil market to rebound over the next week.
“Longer-term, we expect prices to resume their decline as pressure is applied by a weak economy and potential declines in investment. We favour trading the oil market as a trading affair,” he said.
