Brent crude may slip further as inventory mounts

Dubai: Brent crude, which fell more than 4 per cent on Friday, may fall further as high inventory in the United States continues to weigh on sentiment.

This may also weigh on equity markets domestically.

Benchmark Brent crude fell more than 2 per cent on track to its sharpest weekly decline in two months as a weaker US stock market applied further pressure on oil. Brent crude fell 4.22 per cent to end at $54.67 per barrel on Friday.

“The United states ability to store all this surplus crude has increasingly been attracting some attention, leaving the path of least resistance once again to the downside,” said Ole Hansen, head of commodity strategy, Saxo Bank.

The US’s ability to store all this surplus crude has increasingly been attracting some attention, leaving the path of least resistance once again to the downside. The US Energy Information Administration reported on March 4 that US storage facilities were 60 per cent full as of February 20.

Temporary:

“Brent may see more downside on a temporary basis, and may recover later to $65.70 by next quarter,” said Osama Al Ashri, member of British organisation, Society of Technical Analysts. “Lower crude is bound to impact equity markets domestically.”

Brent’s premium to US crude, a spread that commands one of the biggest volumes in oil, turned volatile, moving from a 10-day high of $11 a barrel to below Thursday’s close of $10.

Oil traders will also continue to monitor developments surrounding talks between Iran and world powers over Tehran’s nuclear program.

On Sunday, the Dubai Financial Market General Index ended 2.54 per cent lower, while Muscat Securities Exchange Index also fell more than 1 per cent.