Oil slips after briefly breaching $75 for first time since 2014

By Jessica Summers on 7/3/2018

NEW YORK (Bloomberg) -- Crude oil fell from its highest level in more than three years in New York on prospects for accelerating supply and as traders curbed bullish bets before tomorrow’s public holiday.

Futures in New York jumped as much as 1.8%, then quickly declined. Oil has been buffeted lately as U.S. President Donald Trump -- facing high retail gasoline prices ahead of midterm elections -- has been pushing Saudi Arabia to boost output. And today, a report from data-provider Genscape Inc. is said to show Texas Gulf Coast crude stockpiles rose by about 431,000 bbl last week, reversing previous declines and undercutting prices.

The decline may also be tied to “a bout of long liquidation in front of the holiday,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. And “there is always risk” Trump will release oil from the U.S. Strategic Petroleum Reserve to cap prices, he said.

Oil has surged as the U.S. pushes allies to end imports of Iranian crude, as global supply disruptions persist and American crude inventories shrink. Morgan Stanley raised its Brent crude forecast to $85/bbl through to the third quarter of 2019, citing a tighter market than previously anticipated.

West Texas Intermediate crude for August delivery slipped 42 cents to $73.52/bbl at 10:39 a.m. on the New York Mercantile Exchange, after earlier rising to as high as $75.27.

Brent for September settlement advanced 37 cents to $77.67/bbl on the London-based ICE Futures Europe exchange. The global benchmark traded at a $6.47 premium to WTI for September.

U.S. crude stockpiles are forecast to have declined 5 MMbbl last week, according to a Bloomberg survey ahead of government data released on Thursday. Inventories at Cushing fell 2 MMbbl last week, according to a separate forecast compiled by Bloomberg.

The market “is anticipating a very bullish number” in Thursday’s inventory report, said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “All eyes will be on that Cushing number.”

The industry-funded American Petroleum Institute will release its weekly tally of inventories later on Tuesday.

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