Oil falls ahead of stock market data and discussions with Iran.
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Oil prices fell on Tuesday after gaining earlier in the day, with analysts predicting that the rally would be sustained because to robust demand in the United States, the world’s largest consumer of oil and its products.
After gaining 0.5 percent on Monday, Brent oil was down 5 cents at $85.94 a barrel by 0631 GMT. After finishing unchanged the previous session after touching new highs, US oil fell 12 cents to $83.64 a barrel.
While China’s sweltering power and coal markets have cooled somewhat following government intervention, global energy prices remain high as temperatures drop with the arrival of winter.
“Forecasts for a colder November have energy traders bracing for a very tight market that will be met (with) unprecedented demand this winter,” OANDA senior market analysts Edward Moya said in a note.
“This oil market will remain tight and that should mean a headline or two away from $90 oil,” he said. Brent, according to Goldman Sachs (NYSE:GS), is likely to exceed its year-end projection of $90 per barrel. Switching from gas to oil could add 1 million barrels per day (bpd) to oil demand, according to the bank.
After more than a year of low demand, gasoline and distillate consumption in the United States has returned to five-year averages. This week, the market will be paying particular attention to inventory levels in the United States.
According to a Reuters poll of analysts, crude oil stocks are expected to have increased by 1.7 million barrels last week. However, inventories of gasoline and distillate were predicted to shrink.[EIA/S]
“Limited global oil supplies and signs of increasing demand would continue to see elevated crude oil prices,” said Avtar Sandu, senior manager, commodities at Phillip Futures in Singapore.
Sandu said traders were also looking for clarification on the outcome of talks between Iran and Western powers after the US stated efforts to restore a 2015 nuclear accord with Iran were in a “critical phase,” which might allow for crude exports.
Story by : Norvisi Mawunyegah