Tropical storm Bonnie left Gulf of Mexico oil infrastructure unharmed, but operators had shut down production amounting to 826,000 barrels per day as a precaution. Operations are expected to be back to normal soon.
Prices were also depressed by an unexpected gain in crude inventories. The Energy Information Agency (EIA) said US commercial crude stockpiles rose by 7.31 million barrels as some imports were delayed after Hurricane Alex formed in late June. The delay pushed last week's imports to a four-year high at 11.1 million barrels per day.
Nevertheless, bullish figures from the eurozone helped support the market. The euro rallied above $1.30 for the first time since May after the European Commission reported its economic sentiment indicator at a 28-month high while German unemployment declined to the lowest level since November 2008. Depreciation of the safe-haven dollar makes dollar-nominated assets such as oil cheaper for foreign buyers.
US economic reports sent ambiguous signs to the market last week. The consumer confidence index dropped to a five-month low in July on concerns about business conditions and a weak labour market. In addition, a Federal Reserve report showed the overall economy kept growing but slowed in Atlanta and Chicago as housing markets softened after tax incentives expired. US GDP slowed to a 2.4% annual rate in the second quarter as consumer spending growth slumped. Nonetheless, pessimism was offset by an unexpectedly strong Chicago PMI and a stronger-than-
For this week, SSRG estimates that crude prices will vary within a range of $75-81 a barrel. Traders will watch two weather systems that formed in the Atlantic last Thursday, and will also monitor US unemployment, manufacturing and non-manufacturing indices, and pending home sales.
Also in focus will be European Central Bank and Bank of England meetings on Thursday as any rate decisions may affect the dollar and crude prices. Eurozone purchasing managers' and producer price indices and retail sales data are also due.
Gasoline prices in Singapore fell nearly $3 to $83 a barrel on Friday, on lower import demand from Indonesia. India has also cut its imports as monsoons weaken domestic demand. Dalian Port in China reopened after being closed for nearly a week after an oil pipeline explosion, and the refinery there started loading gasoline exports again. However, the market found some support from a delay of exports from Taiwan after its major refinery closed following a fire last week. For August, the gasoline market is likely to soften on falling US demand as the peak driving season winds down, while rains in Asia will further dampen demand.
Diesel demand has also softened in Indonesia and India, while regional supplies continue to increase after refineries return from maintenance, pushing up inventories in several countries. A shutdown of Taiwan's refinery lent support the market as some export cargoes were cancelled or deferred. Diesel in Singapore traded at $86 a barrel, down nearly $2 from a week ago. Prices may fall this month on a demand-supply imbalance and because of monsoon season, while refineries push more supplies into the market.
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