Oil dipped as algorithmic traders took advantage of market uncertainty, while traders weighed Chinese demand against falling US stockpiles. West Texas Intermediate fell to settle near $77 a barrel, capping the largest weekly decline since the beginning of May. Prices have struggled recently amid selling pressure from trend-following commodity trading advisers and a wider retreat in equity markets earlier this week. Those factors have added to concerns about Chinese growth after Beijing cut rates this week in a bid to stimulate the economy of the world’s largest crude importer.
Still, data this week showed a fourth drop in US inventories, which have declined to the lowest since February. Timespreads continue to point to tight near-term conditions. These mixed signals have kept futures locked in a roughly $4 trading band this week.
“We need a positive catalyst and right now inventory draws are expected and not providing enough of a reason to buy this dip,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. Crude remains modestly higher year-to-date, helped by supply cutbacks from the OPEC+ alliance and expectations for lower US interest rates. Market watchers, however, are now split over whether the producer cartel will ease their curbs next quarter, with an online monitoring committee meeting scheduled for Aug. 1
OPEC Oil Reserves Decline as Exploration Lags Production
Global recoverable oil reserves have declined over the past 12 months, with Rystad Energy seeing a decline of 52 billion barrels year-over-year to around 1,500 billion barrels on the back of insufficient discoveries and downward adjustments in existing discoveries. Saudi Arabia has seen the largest downward revision of any country, with proven and probable oil reserves coming in at 233 billion barrels, down 27 billion barrels…