Crude oil futures slipped under pressure from weaker than expected US industrial data and OPEC’s assurances that it has the capacity to meet any increase in oil demand.
Earlier this week, Secretary General of OPEC Abdalla Salem El-Badri said that the cartel has enough spare capacity to provide oil to customers, should they ask for more.
Fears of possible supply shortages were triggered by OPEC’s decision not to change current production quotas despite pressure from its most influential member Saudi Arabia.
The outcome of OPEC’s meeting in Vienna drove the prices back above the US$100/barrel level, but El-Badri’s comments and reports that Saudi Arabia is preparing to raise production sent oil futures in a freefall.
Crude prices bounced on the news that crude oil stockpiles in the US shed a massive 3.4 million barrels last week, suggesting that the demand from the world’s largest energy consumer increased.
However, the positive trend was quickly reversed after the Federal Reserve Bank of Philadelphia said yesterday that its manufacturing index fell from 3.9 in May to minus 7.7 in June, the lowest level in two years.
US light, sweet crude for July delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), slipped to US$93.61/barrel in New York this morning, while August crude fell to US$94/barrel.
August Brent crude last traded at US$113.54/barrel on London's ICE Exchange in late afternoon trading.
Most oil and gas majors were broadly flat today. Midcaps Heritage Oil (LON:HOIL) and Salamander Energy (LON:SMDR) fell 2 percent by midday London time. Premier Oil (LON:PMO) did better, climbing 1.75 percent.
Iraqi Kurdistan focused Gulf Keystone Petroleum (LON:GKP) and EU operating Europa Oil & Gas (LON:EOG) were among the top performing small caps, rising 5 percent.