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Crude Oil Continues to Fall amid Oversupply Concerns

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Crude oil continues to fall

After starting the day on a weaker note amid ongoing oversupply concerns in the crude oil market, the prices didn’t find support on July 28 and moved lower. At 1:20 PM EST on July 28, the West Texas Intermediate crude oil futures contract for September delivery was trading at $41.11 per barrel—a drop of ~1.9%. Brent crude was trading at $43.17 per barrel—a drop of ~1.7%. Read Crude Oil Holds at a 3-Month Low amid Weak Inventory Data to know more about how crude oil performed in the early morning hours on July 28.

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Sentiment remains bearish

The sentiment in crude oil remains bearish amid ongoing oversupply concerns. The high levels of crude oil inventories along with recovery in the drilling activity dented the sentiment in the crude oil market. According to the data released by U.S. Energy Information Administration (EIA) at 10:30 AM EST on July 27, the crude oil inventories rose by 1.67 MMbbls (million barrels) in the week ending on July 22. The market was expecting a decline in the crude oil inventories by 2.3 MMbbls, but the surprise increase in inventories weighed on crude oil prices.

On the other hand, the market is looking forward to the oil rig count data by Baker Hughes. The data are scheduled to release on July 29. According to the oil rig count data released by Baker Hughes in the previous week, the oil rig count increased by 14 to 371. It recorded an increase for the seventh time in the last eight weeks. This was the fourth consecutive rise in the oil rig count. It triggered concerns about the chances of an increase in domestic crude oil production amid oversupply concerns.

At 1:30 PM EST on July 28, major crude oil producers Carrizo Oil & Gas (CRZO) and British Petroleum (BP) fell ~0.78% and ~1.7%. Canadian Natural Resources (CNQ) and Total S.A. (TOT) gained ~0.17% and ~0.34%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) gained ~0.18% and the PowerShares DB Oil ETF (DBO) fell ~1.2%.

In the next part, we’ll discuss how companies in the energy sector performed on July 28.

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