Oil prices fell on July 20 as the increasing excess of refined products pushed away a dip in crude exports from Saudi Arabia. The fall also more than compensated the concurrent slower American rig activity. Crude prices are following for the last three consecutive weeks due to the opacity of perception related to Iranian oil sales. The country has recently signed a deal where the easing of sanctions is included. Iran is an OPEC producer.
Dipped Crude and strengthened dollar
The prices for Brent Crude in September dipped 35 cents to rest at $56.75 per barrel within 1100 GMT. This benchmark dipped almost three percent in the second week of July. It is now almost 10 percent down until July. The August US crude futures dipped 13 cents at $50.76 per barrel. The contract for August expires on July 21.
The gradual strengthening of the dollar pushed in extra pressure as it forces commodities priced in dollars to be pricier for those investors who prefer to use other currencies. The crude exports of Saudi Arabia dropped to their lowest in May since December, with the official data displaying the daily shipment at about 6.935 million bpd (barrels per day). This figure can be compared with April's 7.737 bpd. This is despite a record high output contribution exceeding 10 million bpd.
Drillers in the US cut a total of seven rigs during the second week of July after two consecutive weeks of increases. This fact was released by Baker Hughes Inc., an oil services company closely watching the events unfolding at hand. However, with refineries all over the globe still operating at almost maximum levels so as to benefit from robust profit margins, a sign of glut in the market for crude oil could be transferred to refined products.
According to analysts working at PVM, the considerable dip in the US rig counts from 2014 September did not have much a negative impact on the domestic production in crude oil exports from Saudi Arabia. There was no reduction as well, as the kingdom has turned the country into a noted product exporter. The inventories of the refined product at the storage hub of Amsterdam-Rotterdam-Antwerp in Europe increased to a historic high during the second week of July.
According to JBC Energy, a Vienna headquartered consultancy group, robust rises in the refinery operations during the last few months are all set to decelerate during 2015's second half, hitting the crude oil demand.