August 22, 2017
Oil traded near $47 a barrel before data forecast to show a further reduction in U.S. crude inventories, which would signal that a global surplus is receding.
Futures in New York were little changed after slumping 2.4 percent Monday. Inventories probably dropped by about 3.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Libya restarted production at its biggest oil field after a disruption over the weekend.
Oil in New York has fluctuated below $50 a barrel this month amid concerns a global glut is draining slower than expected as rising output, particularly from the U.S., offsets production cuts by the Organization of Petroleum Exporting Countries and its allies. Still, U.S. demand for gasoline, which usually peaks in summer, strengthened in early August to a seasonal high.
“Right now, we are seeing a draw on the U.S. inventory stocks,” said Michael Poulsen, an analyst at Global Risk Management Ltd. As “the driving season is coming to an end, the question is if the latest draws in U.S. inventories will continue.”
West Texas Intermediate for September delivery, which expires Tuesday, slipped 8 cents to $47.29 a barrel on the New York Mercantile Exchange. Total volume traded was about 13 percent below the 100-day average. The more-active October contract fell 9 cents to $47.44 at 1:39 p.m. in London.
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Brent for October settlement lost 17 cents to $51.49 a barrel on the London-based ICE Futures Europe exchange. Prices dropped $1.06, or 2 percent, to $51.66 on Monday. The global benchmark crude traded at a premium of $4.06 to October WTI.
U.S. crude stockpiles have declined by almost 43 million barrels since the end of June, according to the Energy Information Administration. While inventories have eased, oil production has increased to the highest since July 2015. Output from major shale fields is also forecast to climb to a record next month.
Exports of Venezuelan crude, the main source of income for the cash-strapped nation, dropped 24 percent in the first half of August, heightening concerns that the country won’t be able to make $3.53 billion in upcoming debt payments. A committee set up to monitor OPEC-led cuts sees compliance with the agreement at 94 percent in July, according to two people familiar with the matter.