Oil ends lower ahead of supply data, but notches February gain
Analysts expect EIA data to show an 8th weekly rise in crude supplies
Oil futures lost a few pennies on Tuesday, but notched a monthly gain for February as traders awaited data that may reveal a rise in U.S. crude inventories for an eighth week in a row.
On the New York Mercantile Exchange, April West Texas Intermediate crude CLJ7, +0.48% fell by 4 cents, or less than 0.1%, to settle at $54.01 a barrel. Based on the front-month contracts, prices saw a monthly gain of roughly 2.3%, according to data from Dow Jones.
April Brent crude LCOJ7, -0.66% on London’s ICE Futures exchange lost 34 cents, or 0.6%, to end at $55.59 a barrel. For the month, the April contract, which expired at the settlement, finished about 0.8% lower, but based on the front-month contracts, prices lost 0.2%. May Brent LCOK7, +0.55% settled at $56.51, up 9 cents, or 0.2%.
Right now, the oil market is in “global push-pull situation,” said Mark Watkins, a Utah-based regional investment manager with The Private Client Group of U.S. Bank. “The U.S. is pushing to fill the gap left by the OPEC agreement, while at the same time OPEC is trying to bring the world supply and demand imbalance back into equilibrium.”
Around the globe, the OPEC agreement has been pulling oil off the global market,” said Watkins, and “the potential to extend the productions cuts beyond June, has spurred on confidence of a support level for the price of oil.”
Oil prices made scant gains overnight on signs that participants in the OPEC-led production cut agreement are fulfilling their pledges. A Russian news agency reported that non-OPEC Russia is expected to show a 117,000 barrel reduction in February from the previous month.
At the same time, however, “the Unites States continues to push oil into the market,” Watkins said. Rig counts have continued to tick higher and, as long as oil stays above $50 per barrel, “we are going to see more drilling from the North American shale producers.”
The Energy Information Administration will release its weekly update on petroleum supplies early Wednesday. Ahead of that, the American Petroleum Institute will issue its own figures late Tuesday.
Analysts surveyed by S&P Global Platts forecast an increase of 2.1 million barrels in crude stockpiles. An increase in the EIA report would mark an eight straight week of rising crude supplies. The survey, meanwhile, shows expectations for a drop of 1.7 million barrels in gasoline stocks and a drawdown of 700,000 barrels in distillates.
On Nymex, March gasoline RBH7, -0.88% settled at $1.512 a gallon, down 2.1 cents, or 1.4%, for the session, with prices shedding 0.9% for the month. March heating oil US:HOH7 lost 1.9 cents, or 1.2%, to $1.621 a gallon, though prices ended the month about 0.6% higher. The March contracts expired at the day’s settlement.
April natural gas NGJ17, +0.11% finished at $2.774 per million British thermal units, up 8.1 cents, or 3%. Prices saw a monthly loss of about 11%.
Commodities traders will also look to U.S. President Donald Trump’s speech at Congress Tuesday evening in Washington, D.C. He is expected to touch on plans for overhauling the tax code, boosting military spending, and revamping the health insurance system.