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Published On: Tue, Jul 29th, 2014

Crude oil prices in Asia drop, US stocks data may show lower demand

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Tuesday saw crude oil price fall in Asia. Department of Energy data to come out on Wednesday are expected to show a decrease in crude oil stocks.

Crude oil prices in Asia ticked down

Crude oil prices in Asia ticked down on Tuesday, before US data of industry stocks which may indicate bearish demand. There was 0.15% reduction in West Texas crude oil for September delivery trading at $101.52 per barrel at the New York Mercantile Exchange. The drop in price followed an overnight low and a high of $100.91 and $102.09 per barrel, respectively. At ICE Futures Europe, Brent oil went down to $107.57 per barrel, a 0.8% decrease.
The American Petroleum Institute data due to be out later on Tuesday on crude oil stocks are in the focus as a guide to the Department of Energy data to be released on Wednesday. The latter is expected to indicate crude oil stocks drop for the US, by 1 million barrel.
Investors have readjusted their stances with the Middle East geopolitical effect on oil after the brief 24 hours’ humanitarian truce agreed on by Hamas and Israel. American President Obama demanded for the truce, however, no general deal was negotiated regarding cessation of hostilities, which cushioned crude oil losses.
Investors are selling oil futures, deeming there should be ample supply globally, due to reports indicating soaring gas stocks at the Cushing, Oklahoma oil hub in the US, and news showing European refineries having plants idle on account of oil products influx from the US. Furthermore, the prior fears of disruption in Middle East areas such as Iraq owing to war actions failed to prove justified.
Another factor behind oil prices decline was the soft US economic indicators. Earlier, it was reported that American pending home sales had a drop of 1.1% in June, although expectations were for a pick-up of 0.5%. With the moderation reached in prices, and with enhanced inventory levels, there have been more auspicious conditions for higher economic activity compared to the early part of this year. But in certain parts of the country there are still supply shortage and flat wages, which, together with tight credit conditions, act as deterrents to the increase in potential buyers who could make full use of the low interest rate environment.

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