LONDON: Oil prices turned negative on Tuesday as investors booked profits after solid gains in the previous trading session and turned their focus back on US oil supply.
Brent crude for delivery in May fell 1.3 per cent to $US57.35 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for May traded at $US51.39 a barrel, down 1.4 per cent from Monday’s settlement.
Oil markets were also pressured by a Goldman Sachs report saying prices needed to remain low for months to slow U.S. oil output growth.
Brent was down 50 cents at $57.62 a barrel by 1100 GMT. U.S. crude was down 60 cents at $51.54 a barrel.
Representatives of state-run National Iranian Oil Company will meet China’s biggest crude buyers including Unipec, the trading arm of top Asian refiner Sinopec Corp, and state trader Zhuhai Zhenrong Corp, officials told Reuters.
Global oil markets already face a supply glut with producers pumping over 1.5 million barrels per day (bpd) more than demand in the first half of this year, analysts say.
“There is a massive oversupply, stocks are rising and now we have the prospect of more Iranian oil coming onto the market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
Goldman said in a research note it expected U.S. crude inventories to top out in April and subsequently draw down at 350,000 bpd during May-September, when demand for fuel to power cars and air-conditioners is at its greatest.
Still, the bank said it saw little upside for its $40-a-barrel forecast over the next three months, anticipating inventories would rise again by October, pressuring prices into 2016.
“Prices need to remain low in coming months to achieve a sufficient and sustainable slowdown in U.S. production growth,” the bank said, adding that the U.S. outlook for 2016 made its forecast for $65-a-barrel oil next year look too high.
On Monday, energy information group Genscape said its data showed stocks at the Cushing, Oklahoma oil hub rose by 169,000 barrels in the week to April 3.
The American Petroleum Institute will release weekly oil inventories data on Tuesday at 4:30 p.m. EDT (2030 GMT), while the Energy Information Administration will publish its data on Wednesday at 10:30 a.m. EDT.
