Crude oil futures trade near multi-month lows on supply glut woes
Investing.com – Crude oil futures traded near multi-month lows on Wednesday, as ongoing concerns over a glut in world markets continued to drive down prices.
On the ICE Futures Exchange in London, for September delivery hit an intraday low of $52.62 a barrel, before trading at $52.66 during European morning hours, down 64 cents, or 1.21%.
A day earlier, London-traded Brent futures fell to $52.28, a level not seen since January 30, before paring losses to end at $53.30, down 17 cents, or 0.32%.
London-traded Brent futures dropped 18% in July amid concerns a resumption of Iranian oil exports will add to a global glut.
Iran and six world powers reached a long-awaited nuclear deal earlier in the month that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program. Iran reportedly hoards 30 million barrels of oil in its reserves ready for export.
Reports of record high oil exports from Iraq and robust production from Saudi Arabia also contributed to losses.
Elsewhere, on the New York Mercantile Exchange, for September delivery hit a session low of $47.43 a barrel before trading at $47.49, down 49 cents, or 1.03%.
On Tuesday, Nymex oil futures slumped to $46.68, the weakest since March 23, before turning higher to close at $47.98, up 59 cents, or 1.24%.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by in the week ended July 24, compared to expectations for a decline of 0.7 million.
Wednesday's was expected to show that U.S. crude oil stockpiles fell by 0.2 million barrels last week, while gasoline stockpiles were forecast to rise by 0.5 million barrels.
New York-traded oil futures slumped 21% in July as ongoing worries over high domestic U.S. oil production weighed.
According to industry research group Baker Hughes (NYSE:), the number of rigs drilling for oil in the U.S. increased by 21 last week to 659, the most since May.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $5.17 a barrel, compared to $5.32 by close of trade on Tuesday.
In other news, Federal Reserve officials are expected to provide further signals that the central bank could raise rates as soon as September if the economy continues to improve as expected when it releases its rate statement later in the session.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to 96.96 early on Wednesday.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.