Oil prices flutter as U.S. supply data loom
Crude oil futures swung between small gains and losses on Wednesday ahead of a closely watched report on U.S. oil supply that could add to recent fears that measures by major oil producers to balance the market aren’t working.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September CLU7, -0.81% were down 11 cents, or 0.2%, at $49.04 a barrel, but had both traded slightly higher and significantly lower earlier in the session.
October Brent crude LCOV7, -0.64% on London’s ICE Futures exchange shed 1 cent to $51.77.
The market had taken a glass-half-full perspective last week amid pronouncements of major producers sticking with ongoing production cuts and Saudi Arabia planning to reduce oil exports this month.
But the cautious view returned Tuesday as both Reuters and Bloomberg reported that output among members of the Organization of the Petroleum Exporting Countries jumped in July, partly due to a surge in production in Libya. If correct, that goes against the view that the group is adhering to output caps. The next OPEC monthly oil report is due on Thursday.
After oil prices settled on Tuesday, the American Petroleum Institute said U.S. crude inventories rose 1.8 million barrels last week, going against forecasts of a decline. Traders are now waiting to see if the official data from the Energy Information Administration due at 10:30 a.m. Eastern Time will show the same trend. Reports last week showed a drop in U.S. inventories, spurring hopes the global supply glut is declining.
“Last week’s substantial decline in inventories—albeit a smaller one than API reported a day earlier—came as reports suggested that Saudi Arabia was cutting exports to the U.S. with the end goal appearing to be to cut inventories and grab markets attention,” said Craig Erlam, senior market analyst at Oanda, in a note.
“While this clearly had the desired impact initially, this week’s numbers—should EIA report something in line with API—could raise questions about the effectiveness of the measures or whether they’re being sustained,” he added.
OPEC is scheduled to hold a two-day meeting next week to review members’ commitments to the production caps they have agreed to. Several smaller producers, such as Ecuador, have already voiced their dissension, saying they don’t have economic prowess to keep sidelining production amid low prices.
Among refined products, reformulated gasoline blendstock RBU7, -1.85% eased 0.1% to $1.66 per gallon, but August ICE gas oil rose 0.8% to $487.50 per metric ton.
Natural gas for September NGU17, +0.00% fell 1% to $2.79 per million British thermal units.