Oil prices fluctuate up and down around $50 a barrel

23 June 2016 18:06 (UTC+04:00)

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By Fatma Babayeva

Oil prices again fluctuates up and down around $50 a barrel.

On the New York Mercantile Exchange (NYMEX), the price of WTI crude’s contracts with August delivery declined by 1.05 percent to $48.85 a barrel on June 23 by 8:58 am, while on the London ICE, August contracts of Brent benchmark crude cost $50.71 a barrel on the same day by 8:33 am.

The price of a barrel of Azeri Light crude increased to $50.66 in the global market on June 23.

A day before, OPEC’s oil basket price amounted to $46.46 a barrel.

The future of the global oil market is uncertain now with existing crude glut and debatable economic growth. How long it will take for disrupted outputs to return to the market is also a questionable matter.

Oil prices crossed the red zone on June 22 by beginning falling after the release of the data on the weak reduction of the U.S. crude inventories for the past week, reported Ria Novosti.

The U.S. Department of Energy reported the country’s commercial crude stockpiles (excluding strategic reserves) plummeted by 0.9 million barrels or 0.2 percent to 530.6 million barrels by June 17 during the week.

Analysts expected that crude inventories of the U.S. would decrease by 1.671 million barrels or 0.31 percent to 529.83 million barrels for the given week.

Department of Energy noted that the U.S. crude production dropped by 0.44 percent or 39,000 barrels a day to 8.677 million barrels a day during the week.

A decline of 1.3 million barrels to 65.2 million barrels was observed in the oil inventory in Cushing.

In the meantime, gasoline stocks of the U.S. increased by 0.6 million barrels or 0.3 percent to 237,6 million barrels. Nevertheless, the experts anticipated a reduction of 0.326 million barrels.

Additionally, distillate stocks climbed by 0.2 million barrels or 0.1 percent to 152.3 million barrels. Analysts projected this figure to go up by 0.257 million barrels.

Experts explained the decline in global oil prices with weak reduction in inventories compared to forecasts.

The data was also much worse than forecasted by the American Petroleum Institute (API), according to which the indicator fell by 5.2 million barrels for the reporting week.

Oil price rally is still continuing and not out of danger as the market is still oversupplied. Moreover, results of the upcoming UK’s Brexit referendum can be bearish for oil prices and an immediate fall in the days following is expected.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva