May crude dropped by 39 cents down to $51.75 a barrel after ending at its highest closing price in months on Monday.
According to Reuters, a chief analyst at CMC Markets said that the U.S. benchmark could rise further after refineries return from maintenance.
Ric Spooner, chief analyst at CMC Markets in Sydney, told Reuters:
“A lot of people are waiting to see some improvement in the supply-demand balance and we’re getting closer to the time when it might happen,”
However, Goldman Sachs said that production growth will remain too strong for substantial gains.
In a note to clients the investment bank said:
“While the decline in the U.S. rig count has been faster than we expected, it remains insufficient in our view to balance the U.S. market in 2016,”
“Prices need to stay low for longer to achieve a sufficient and sustainable slowdown in U.S. production growth.”
According to Goldman Sachs, inventories will peak in April, and then decline from May to September.
“Any meaningful price recovery on evidence of declining production and U.S. crude inventories would further undermine the U.S. rebalancing process,” it said.
The API is going to release its weekly oil inventories data on Tuesday while the EIA will release its data on Wednesday.
Gas prices set to drop in time for summer, says AAA spokesman
AAA spokesman Avery Ash said in a statement:
“There is real hope that gas prices could drop significantly in time for the busy summer driving season,”
Adding:
”The overall outlook looks good for drivers, and with any luck we will avoid the types of problems that often led to higher gas prices this time of year.”