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Hong Kong - Oil halted losses below $48 a barrel ahead of US government data forecast to show crude stockpiles extended declines during a period of strong seasonal demand, trimming a glut.
Futures were little changed in New York after falling 2.5% on Monday, the biggest drop in more than five weeks. Crude inventories probably declined by 3.6 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Wednesday. US output at major shale fields is forecast to climb to a record next month, a report from the EIA shows.
Oil in New York has been unable to hold a rally above $50 a barrel this month as investors weigh rising global supply against output cuts by the Organisation of Petroleum Exporting Countries and its allies. OPEC compliance to the deal was at 87% in July, according to a person familiar with the matter.
“The test for the market will be if the US crude stockpile declines that we’ve seen will continue after the seasonally strong summer period, although at a lesser pace,” said David Lennox, a Sydney-based analyst at Fat Prophets. “At the moment, we’re seeing a balancing act between the OPEC-led curbs in production and the increase from US output.”
West Texas Intermediate for September delivery was at $47.58 a barrel on the New York Mercantile Exchange, down 1 cent, at 08:46. Total volume traded was about 18% below the 100-day average. Prices slid $1.23 to $47.59 on Monday, the largest one-day decline since July 7.
Brent for October settlement added 3c to $50.76 a barrel on the London-based ICE Futures Europe exchange. The contract slumped $1.37 to $50.73 on Monday. The global benchmark crude traded at a premium of $3.05 to October WTI.
US crude inventories have declined by more than 33 million barrels since the end of June, according to the EIA. Production at shale fields is forecast to expand to 6.15 million barrels a day next month, according to a monthly drilling report productivity report from the government department.
Oil-market news:
Oil investors are already worrying over the potential fallout when OPEC’s deal to cut output expires, marring emerging signs that the accord to shrink a glut is finally succeeding.
Resurgent long positions in Brent crude last week were encouraged by the outlook for a return to backwardation at the front of the curve, according to analysts from UBS to Saxo Bank.
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