One expert told the media the momentum in the physical and financial markets will boost oil prices. Companies from Vitol Group, the largest independent oil trader, to energy major BP Plc still see shale as creating a ceiling, especially at current prices. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.
United States crude ended Monday's session down Dollars 1.09, or 2.1%, at USD 50.58.
Fitch said global inventories of both crude oil and refined products remain well above historical averages. "They've been pretty good with the compliance levels, but that can slide at any given moment", Bob Yawger, director of the futures division at Mizuho Securities USA Inc.in NY, said by telephone.
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Despite the downturn in USA traded crude, market participants have maintained optimism, given futures hovering above $50 a barrel, which has been viewed as a key technical level for the commodity. This should help draw down the massive 3 billion barrels of surplus crude oil that now plagues the oil industry.
Crude oil futures continued to fall Tuesday morning, and may struggle to hold the USD50 a barrel mark ahead of U.S. inventories data.
Just as important, global crude inventories have begun to decline.
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The bigger the discount of prompt prices to future ones, the greater the incentive for owners of physical barrels of oil to store it for sale in the future when it will sell for more. Hedge funds are again piling into oil, as are long-term passive investors, attracted not only by rising prices, but also by a profitable change in the forward-price curve . And only two said that $65 a barrel was a buying opportunity.
"Nevertheless, the prospects for demand for crude oil in 2018 do not leave any chance for OPEC and other oil producing countries to increase oil production and they will have to extend the term of the deal, which will expire in March 2018, to render further support for the oil market". The need for sustained production curbs is a sign the bulls are on fragile ground.
Some traders said this was also an indicator that markets remained amply supplied despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation to cut output to tighten the market and prop up prices.
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Oil prices dipped on Thursday after the United States reported record crude exports, although traders said that efforts led by OPEC and Russian Federation to cut production meant markets remained well supported overall.