Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
[Myra P. Saefong, MarketWatch]
Brent crude prices edge higher; U.S. supply data on tap
Oil prices settled at a two-week low on Tuesday, as traders weighed prospects for global supplies on the back of a rise in OPEC production last month and ahead of data that are expected to show a second-straight weekly decline in U.S. crude inventories.
On the New York Mercantile Exchange, November West Texas Intermediate crude CLX7, -0.65% fell 16 cents, or 0.3%, to settle at $50.42 a barrel. The contract marked its lowest finish since Sept. 19, according to FactSet data. December Brent crude LCOZ7, -0.61% on the ICE Futures Exchange shed 12 cents, or 0.2%, to $56 a barrel.
WTI prices fell more than 2% Monday after a recent survey of analysts conducted by Reuters pegged the Organization of the Petroleum Exporting Countries’s September crude output at 32.86 million barrels a day, up from the previous month and above its production cap.
“The important thing to take away from this is the drop of the production cut compliance ratio to just 86%,” Nico Pantelis, head of research at Secular Investor, told MarketWatch. “This might put some pressure on the possibility to reach an agreement about extending the lower production levels” past the March 2018 expiration.
Phil Flynn, senior market analyst at Price Futures Group, however, said he believes that the “global rebalancing of the oil market is still under way.”
Analysts polled by S&P Global Platts expect the EIA to report a decline of 1.5 million in crude stocks for the week ended Sept. 29. The analysts also expect to see a climb of 1.5 million barrels in gasoline stocks and a fall of 2.4 million barrels for distillates.
“Libya oil output was at a five-month low as their biggest oil field was shut down and the market is going to react when they hear that the field may come back on line,” said Flynn, in a daily note.
“But in the bigger picture, oil is looking to see if it can hold $50 as we enter what is rationally weak demand period for oil,” he said. “Yet the traditional shoulder season for oil is off as Hurricane Harvey, Irma have made it necessary for many refineries to put off maintenance to replace lost supply and to keep up with growing global demand.”
Back on Nymex, November gasoline RBX7, -0.21% added a penny, or 0.7%, to $1.566 a gallon, while November heating oil HOX7, -1.12% shed 1.6 cents, or 0.9%, to $1.751 a gallon.
November natural gas NGX17, -0.55% ended down 2.1 cents, or 0.7%, at $2.895 per million British thermal units.
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