Brent, the global oil benchmark, dropped to its lowest price on Tuesday since the month of January amid concerns regarding the constant global oversupply of crude. US prices, on the other hand, gained ahead of the weekly inventory data.
The US oil benchmark as well as the global oil benchmark Brent only recently stepped into bear markets amid worries of investors that the markets would continue the glut right till the end of the year. The bear markets are defined as a 20 per cent decline from a recent high. Production is still at a high even after massive spending cuts by oil companies. Analysts say that the demand for the same could fall after the busy season of summer driving comes to an end.
Brent crude meant for delivery in September settled at 0.3 per cent or 17 cents to reach US$ 53.30 per barrel on the ICE Futures Europe. This has been the lowest settlement since January 30 this year.
Gasoline futures settled at 0.9 per cent or 1.72 cents to reach US$ 1.8032 per gallon. This has been the lowest level since April 9 this year.
Brokerage company Powerline Group said in a statement that the global oversupply of crude oil, which is presently the propelling factor in prices, seems to surpass the demand well into the near future.
The US oil benchmark rose 1.2 per cent or 59 cents to reach US$ 47.98 per barrel on the New York Mercantile Exchange, breaking a losing streak of four sessions.
Traders are still waiting for the weekly inventory data from the United States Energy Information Administration, which is supposed to be released at 10.30 am EDT on Wednesday. The Wall Street Journal surveyed analysts who expect the agency to state that crude oil and gasoline stockpiles remained unchanged over the last week, while distillates supplies went up.