Middle East oil benchmark Dubai sank to the lowest in seven weeks on higher production from the Middle East and slowing seasonal demand.
Dubai was down $1.76 to $117.05 a barrel, the lowest since Feb. 21, according to data compiled by Bloomberg. The crude’s backwardation, when the price for delivery now is greater than that for later, dropped 10 cents. Swaps for May were $1.40 a barrel more than July, according to data PVM Oil Associates Ltd., a London-based broker. That price spread is down 17 percent so far this month and signals weakening demand from oil refiners for immediate shipments.
“It could be that momentum is changing and that market participants are beginning to notice the stock builds occurring on the back of ramped-up production out of the Middle East,” Vienna-based JBC Energy GmbH said in a research note today. “With Saudi storage facilities now full, the Kingdom’s barrels are entering the market directly and soaking up seasonally lower demand.”
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