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Oil prices down on profit-taking

commoditytips-depOil prices fell in Asia on profit-taking today following two days of gains, with concerns about a global oversupply keeping optimism in check. The losses come despite a rally across regional stock markets after the Bank of England announced an interest rate cut — the first since 2009 — and surprise stimulus to shore up the economy after Britain’s vote to leave the EU. At about 0355 GMT, US benchmark West Texas Intermediate was down 36 cents, or 0.83 percent, at USD 41.57 and Brent was 40 cents, or 0.90 percent, down at USD 43.89. The commodity rose around six percent over Wednesday and Thursday an energy report showing US gasoline stockpiles had slipped last week. However, the gains came after both contracts had fallen into a bear market, having lost 20 percent from recent highs above USD50 seen in early June. Prices dropped below USD 40 a barrel on Monday, the first time since April. “We’ve had a strong turnaround at a key level near USD 40 a barrel and that means the risks for crude in the short-term appear to be to the upside,” Michael McCarthy, a chief strategist at CMC Markets in Sydney told Bloomberg News. “It now looks like a potential return to a point between USD 44 and USD 45 is the most likely outcome.” CMC Markets senior sales trader Alex Wijaya said told AFP that “other than the USD 40 technical floor to oil, the dip in prices could also be due to profit-taking from short-selling after Wednesday’s (stockpiles) data pushed prices up”. “Taking all this into consideration, the market is now trying to find a fair value spot, a rebalance,” Wijaya said. “Going forward, all eyes will be on demand in China and Asia.” Investors will be watching the release later Friday of US July jobs data, which will give a fresh look a the world’s top economy and oil consumer.
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