The price of crude oil went down again weighed by weaker U.S. refined fuels markets and eventual negative impact of the Greek debt crisis on Europe’s energy demand. These concerns about a possible oversupply of U.S. diesel and gasoline were further exacerbated by growing uncertainties about the millions of barrels of Nigerian oil floating in the Atlantic looking for consumers. As a result, the prices of both Brent crude and U.S. West Texas Intermediate dropped sharply.
According to Scott Shelton of ICAP in Durham, the situation “feels like the bulls have thrown in the towel in their pursuit of pushing WTI up to $65.” During the past two weeks, U.S. crude has lingered between $59 and $61 while Brent has been trapped between $62 and $65. The price has been mostly influenced by refined products, as there is currently more demand for motoring fuels ahead of the U.S. summer driving season. The U.S. Energy Information Administration showed on Wednesday (24 June) that gasoline stockpiles went up by 680,000 barrels last week, which is more than twice than the estimations. Heating oil and diesel rose 1.8 million barrels unlike the expected 1 million. Mr. Shelton admitted that some products might have been overproduced in recent weeks.
The situation is being aggravated by the ongoing failure of Greece to reach an agreement with international creditors. Markets are being hunted by the possible default of Greece on its debt, which would have a tremendous impact on Europe and especially the Eurozone and the continent’s oil demand. Moreover, the pending nuclear deal with Iran is also having its influence on oil markets. Teheran is expecting that Western sanctions will be lifted soon, which would instantly boost Iran’s exports. “The prospect of another 1 million barrels per day increase in supply from Iran … could easily drag prices below $60 again,” London-based Capital Economics explained.