Oil was in complete sync with the global equity markets with U.S. stock futures retreating to $26 per barrel levels. The biggest factor hurting the commodity was the U.S. government data that posted an 11th consecutive growth in total stockpiles during the last 14 weeks as a result of supply additions. However, the agency said that the crude reserves declined over the last week.
Crude reserves declined
Energy Information Administration reported that crude stock reserves fell 754,000 barrels during last week due to lower imports. The decline came against the expectations of a rise in inventories by 3.6 million barrels. However, there was a record increase in gasoline and diesel reserves. The data failed to encourage markets, which viewed the decline as a temporary phenomena.
As the dismal demand outlook weighed over the data today, Brent crude dipped $0.53 to $30.31. The West Texas Intermediate lost 3.75% and was trading near $26.42, a level lowest since 2003. According to experts, the weakness is also relative to the negative sentiment around global markets as investors flee to safer assets.
Will OPEC Meet?
At the same time, the development around possible meet between OPEC and non-OPEC members is not promising. As per reports, Russia’s largest oil producer, Rosneft OJSC has stated that the idea of cooperation between oil producing nations is nothing but an illusion. The oil producer strongly believes that none of the nations will agree to an output cut as speculated. The statement contradicts Russia’s earlier hint about its willingness to join OPEC members in their bid to correct oil glut situation.
On the other hand, Goldman Sachs has also indicated that any recovery in oil prices is not expected until late 2016. The bank stated in its note that the risks associated with a slowdown in China alongside oil price slide have started showing an impact at a pace faster than expected. Resultantly, the bank forecasts the oil prices to remain in the range of $20-$40 for the most of the year.
iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) fell 1% to $4.47 during the previous session.