Crude falls to monthly-low, as investors await weekly supply reports
Investing.com -- Crude futures moved lower on Wednesday reaching a four-week nadir, as investors awaited the release of weekly inventory data for a further gauge on global supply levels.
On the New York Mercantile Exchange, WTI crude for July delivery fell 0.46 or 0.79% to 57.57 a barrel. Texas Long Sweet futures wavered between a session-low of $57.45 and a peak of $58.95 on a choppy day of trading. WTI futures have now closed down on four of the last five sessions after peaking above $60 a barrel at the close on May 21.
On the Intercontinental Exchange (ICE), brent crude for July delivery lost 1.61 or 2.53% to close at 62.11 a barrel. Brent has also closed lower in four of five sessions and is down more than 10% since peaking above $70 on May 6.
The spread between the U.S. and international benchmarks of crude fell to 4.54, down from Tuesday's level of 5.70.
Both WTI and brent fell precipitously on Tuesday, each dropping at least 2.75% amid a stronger dollar.
The U.S. Dollar Index posted its highest daily-gain in nearly two years during Tuesday's session, while the euro fell to its lowest level against the dollar on the month. Crude prices typically decline when the euro depreciates against the greenback.
Prices continued to fall, as reports surfaced of a strategy by Iraq to flood the global markets with Iraqi crude in an effort to emasculate U.S. shale sales. Iraq plans on outlining its strategy at next week's OPEC meeting in Vienna, according to Bloomberg, in which it could announce its intentions of boosting exports by more than 25% from its current level. The strategy would release approximately 800,000 barrels per day onto global markets, increasing the total of Iraqi crude exports to a record 3.75 million barrels per day.
Crude prices are down roughly 20% since OPEC triggered an oil crash in late-November with its decision to keep supply levels constant. Had OPEC lowered its ceiling on production, prices may have stabilized even as the world's largest oil cartel risked losing market share to the U.S.
With a vast supply of crude in reserves, Saudi Arabia appeared content to depress oil prices in an effort to slow U.S. shale production. At one point in January crude futures had declined by more than 75% since peaking at above $115 last June, amid a glut of oversupply throughout the globe. Crude prices, however, rebounded as production slowed this spring, rallying by more than 20% during the month of April.
Earlier this month, officials from the International Energy Administration declared that the battle between OPEC and the U.S. for global market share had not ended, but instead had "just begun."
Analysts expect U.S. stockpiles to decline by 2.0 million for the week that ended on May 22 when the American Petroleum Institute releases its weekly supply report later on Wednesday. The Energy Information Administration will release its weekly inventory report on Thursday, delaying the release by a day due to the Memorial Day holiday.
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