Crude oil futures weekly recap, July 7 – July 11

WTI and Brent futures closed for considerable losses this week, with supply-driven pressure coming from Libya and Iraq, and weaker gasoline demand outlooks, read from the US weekly oil report.

West Texas Intermediate futures for settlement in August closed for $100.83 per barrel on Friday on the New York Mercantile Exchange, down 2.04% for the day and logging about 3% down for the week. Weekly high and low stood at, respectively, $104.20 per barrel on Tuesday and $100.44 per barrel on Friday, which was also the lowest point in the last two months. Last week the US benchmark lost about 1.9%.

Meanwhile on the ICE in London, Brent futures due in August recorded a 1.84% daily drop to close for $106.66 per barrel on Friday, losing about 3.4% for the week. Brent’s premium to WTI stood at $5.83, widening last week’s closing margin of $6.87. Weekly high and low were at, respectively, $110.92 per barrel on Monday and $106.27 per barrel on Friday, which was also the lowest price in three months. The European brand dropped about 2.3% last week.

“Libyan barrels are coming back and the trouble in Iraq turned out to have minimal impact on oil output,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said for Bloomberg. “There are also technical factors sending us lower. This has turned into a toxic brew for oil prices.”

US oil report

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through July 4 on Thursday. The log revealed a 2.370 million-barrel draw for commercial crude oil inventories, gasoline inventories added 0.579 million barrels, while distillate fuels stockpiles levels increased by 0.227 million barrels.

“Yesterday’s weekly oil inventories showed lower-than-expected gasoline demand,” Michael Poulsen, analyst at Global Risk Management Ltd. in Middelfart, Denmark, said in a report, cited by Bloomberg. It’s “a surprise since the summer driving season is presently peaking.”

Oil at Cushing, Oklahoma, the delivery point for the NYMEX contract and the largest hub in the US, was reported at 20.9 million barrels for a 0.4 million-barrel gain, after a drop of 1.3 million was logged for the previous week. Meanwhile, hubs at the Gulf Coast saw 4.2 million barrels drawn, after a further 3 million drop was reported last week.

“Inventories at Cushing increased unexpectedly and WTI is reacting to that,” said for Bloomberg Amrita Sen, chief oil markets analyst at consultant Energy Aspects Ltd. “The stockpile increase came as a result of reduced flows out of Cushing on the Seaway pipeline following a two-day outage.”

Libya

Libya will begin to gradually increase exports through the two reclaimed terminals to avoid disrupting oil markets, Samir Kamal, the nation’s governor to OPEC, said according to Bloomberg.

The National Oil Company was told to start marketing supplies from the two terminals earlier this week.

The Es Sider and Ras Lanuf facilities are Libya’s biggest and third-biggest ports, and have a combined potential exporting capabilities of more than 0.5 million barrels per day. The rebels who had occupied the ports have handed them over to the newly elected government as a sign of support.

Libya’s output totaled 350 000 barrels per day on Thursday, more than double the figure from a month ago, Mohamed Elharari, a spokesman at National Oil Corp., said, according to Bloomberg.

Meanwhile, a pipeline from the Sharara field was also reclaimed on Tuesday. The deposit has a 300 000 barrels per day capacity.

“Recent news that Libya will resume the export from two major terminals have removed parts of the risk premium,” Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said for Bloomberg. “And no news that the fighting in Iraq is spreading to the southern oil rich areas have given the oil market a breathing space, at least for the moment.”

Next week

Unlike this week, the next seven days will offer quite a bit of economic data. US retail sales for June are expected to log a 0.6% monthly gain, after the 0.3% growth in May, while core retail sales are projected to have added 0.5% on a monthly basis. Industrial production and PPI for June will be posted on Wednesday, with expectations of slight gains in both. Thursday will see key housing data, with building permits and housing starts for June projected to stand for minor increases.

China

Chinas foreign direct investments for June will be reveled early on Monday, and analysts predict a 5.6% drop on an annual basis, after the 6.7% drop in May. Early on Wednesday the worlds second-top economy and oil consumer will also post retail sales and industrial production for June, and quarterly GDP figures for Q2 of 2014. Analysts expect sizable annual increases across all gauges.