Thursday data on US crude inventories was higher than expected. In addition, the dollar gained more pushing oil future further down in electronic trading.
During East Asian hours US crude oil for April delivery fell by 0.9% losing 86 cents to trade at $94.36 per barrel. That added more to the strong decline on the New York Mercantile Exchange seen Wednesday.
Yesterday during the Nymex session, oil for April delivery dropped 1.9%, losing $1.88. The negative trade was partly caused by concerns over a large block of sales. Speculation on Saudi Arabia raising it crude output additionally suppressed prices.
At the same time on Thursday the London-traded rival – Brent North Sea crude also edged down. Yet the loss had a slightly smaller margin. Brent future contracts for April delivery declined by 0.5% losing 58 cents to trade at $115.02 per barrel. This moderately increased the gap between European and US benchmark oils.
The effect over Nymex crude was larger than the projected from a US crude oil supply rise forecast for last week. The crude inventories rose by 3 million barrels. That surpassed the expected growth of 2 million barrels. The report was released by the American Petroleum Institute. Later on Thursday, investors and traders expect the US Energy Information Administration report.
In addition, rising US dollar also puts pressure on oil. The ICE dollar index edged up to 81.124 while yesterday it was 81.074. Thursday the index was well above the 80.450 threshold.
Projections for near-term Brent support suggest $115.00 per barrel. Earlier on Thursday we saw it testing while resisting at $116.70 per barrel.
Though, oil investor should not lose hope. Analysts report that the energy demand of China should support the forward run of the market.
The current oil-demand growth forecast for China is 5% on year over year basis. Though, some new energy policies in the country could propel the real growth. Boost oil supplies policies include tax changes, airport expansion and highway tolls during major holidays. Improvement in Chinese manufacturing data also adds to the upward tendency.
Yet there are some concerns about this data. In January, heavy smog was registered in China. Therefore the government put focus on pollution. Possible restrictions on industrial activities and driving may hurt the oil demand in China.