The U.S. crude-oil benchmark failed to hold on to initial gains Tuesday, losing ground for a fifth straight session as traders awaited the latest round of supply data. On the New York Mercantile Exchange, West Texas Intermediate crude futures for delivery in April lost 17 cents, or 0.3%, to close at $49.28 a barrel. WTI’s losing streak is the longest since August. Brent crude for April delivery on London’s ICE exchange also failed to hold on to initial gains, dropping 24 cents, or 0.4%, to close at $58.66 a barrel. Both Nymex West Texas Intermediate and Brent crude posted losses of more than 2% on Monday, with sharper losses from WTI crude as market bears stayed focused on U.S. oil inventory levels rising to record highs.
Weekly U.S. oil inventory data will start coming in Tuesday, with the API Weekly Statistical Bulletin due later in the day and the EIA Weekly Petroleum Status Report due on Wednesday. “We believe that there is still enough low-cost capacity in the U.S. to produce at lower prices, allowing supply to expand again in 2015-16, albeit at a much slower pace than in 2012-14,” the Economist Intelligence Unit said in its latest global report. It said the drilling-rig count in the U.S. has fallen sharply, but there will be a time lag before it eventually dampens the supply of U.S. shale oil. “Oil prices are also being affected by the strength of the U.S. dollar, which we expect to appreciate further against the euro in 2015,” the Economist Intelligence Unit said. It still forecasts Brent crude to average $54.40 a barrel in 2015 and expects a slightly larger decline in WTI crude to $48.70 a barrel during the year.
Greece and Yellen: Wider financial and currency markets are sensitive to eurozone developments. European stocks gained ground as eurozone finance ministers approved a list of reform measures proposed by the Greek government as part of its bid for a four-month extension of its bailout package. Meanwhile, in the first of two days of testimony before Congress, Federal Reserve Chairwoman Janet Yellen signaled the central bank would drop the word “patient” from its forward guidance, taking another step closer to a rate hike, but softened the blow with several dovish comments suggesting there is no hurry to actually tighten policy.
Meanwhile, there has been no progress to resolve a strike involving workers of the United Steelworkers union at U.S. refineries. The union said around 6,600 oil workers are currently engaged in a strike at 15 refineries and chemical plants across the U.S., and negotiations with the oil companies are continuing. “The main feature of the oil market in the short term is likely to be volatility,” the Economist Intelligence Unit said, adding that the second half of the year might see a recovery.