Brent shed gains after EIA's weekly inventory report

The front-month ICE Brent contract has decreased by $0.46/bbl on the day, to $79.80/bbl at 09.00 GMT.

PHOTO: Oil barrels placed on the US Dollar bills. Getty Images

Upward pressure:

Brent futures received some upward thrust amid anticipation of tight supply.

Russia will reduce its oil exports by 2.1 million mt in the third quarter, in line with the planned voluntary cuts of 500,000 b/d in August, Reuters reported citing the country’s energy ministry.

“Given the tightening that we expect in the oil market as we move through the second half of this year, we believe it is only a matter of time before Brent moves above $80/bbl,” said ING’s head of commodities strategy Warren Patterson.

Brent also gained some support from the decline in Russian seaborne crude flows, commented SPI Asset Management’s analyst Stephen Innes. “Moscow is finally appearing to make good on its pledge to cut supply to international markets,” he added in a note.

Downward pressure:

Brent shed yesterday’s gains as the US Energy Information Administration (EIA) report posted disappointing demand figures and a lower-than-expected drop in crude inventories, said OANDA’s market analyst Ed Moya.

The EIA said that production cuts from OPEC members and increase in petroleum consumption will lead to an average inventory drawdown of 400,000 b/d between now and the end of next year.

“Some renewed strength in the USD weighed on oil prices yesterday, whilst US inventory data was not the most constructive,” said Warren Patterson. “The EIA’s weekly inventory report was also not the most constructive, with crude and gasoline draws coming in lower than expected,” he added.

By Aparupa Mazumder

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