Oil Edges Higher as August Rally Wanes
August 30 2016 - 5:18AM
Dow Jones News
By Kevin Baxter
Oil prices edged higher Tuesday amid lower trading volumes as
the August price rally lost momentum, with crude hovering around
$47-$50 a barrel.
The October contract for global benchmark Brent was up 0.35% at
$49.43 a barrel, while U.S. counterpart West Texas Intermediate was
up 0.4% at $47.17 a barrel.
Monday's bank holiday in the U.K. cut into trading volumes for
both benchmarks. A similar holiday taking place this weekend in the
U.S. means that some observers expect the markets to remain
stagnant until next week.
"Technical momentum is stalling and there are no obvious signs
out there that suggest prices will change that much in the next
week," Olivier Jakob from the Switzerland-based Petromatrix
said.
Mr. Jakob added that the August rally had been driven by short
covering, a market term for buying back oil contracts that were
sold at a higher price, and now that has ended, the market is
drifting.
Other observers believe that oil prices have reached their peak
for now and will be on the defensive as bearish fundamentals start
to have an impact.
Dominick Chirichella, from the New York-based Energy Management
Institute, said in a note that waning interest in a possible
production-freeze deal from major producers was one factor. He also
cited the stronger dollar and the prospect of Nigeria increasing
exports if a deal is brokered with militants as other negatives
that could weigh on prices in September.
The American Petroleum Institute releases its forecast for U.S.
stock levels Tuesday, with official data from the Energy
Information Administration to follow on Wednesday.
Nymex reformulated gasoline blendstock for September--the
benchmark gasoline contract--rose 43 points to $1.4712 a gallon,
while September diesel traded at $1.4875, 13 points higher.
ICE gas oil for September changed hands at $432.50 a metric ton,
up $1.75 from Monday's settlement.
Write to Kevin Baxter at Kevin.Baxter@wsj.com
(END) Dow Jones Newswires
August 30, 2016 05:03 ET (09:03 GMT)
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