MarketWatch, 25 Jan. 2017- Oil futures slipped Wednesday as traders continued to weigh the prospect of production cuts by big oil-producing nations against a rise in U.S. drilling and inventories.
Light, sweet crude for March delivery CLH7, -0.68% eased 16 cents, or 0.3%, to $53.03 a barrel in the Globex electronic session of the New York Mercantile Exchange. Brent crude for March LCOH7, -0.65% lost 10 cents, or 0.2%, to $55.23.
The declines reversed a gain during New York trading hours, the latest in a sideways trading pattern that has marked the oil market for most of January. November’s production-cut agreement by the Organization of the Petroleum Exporting Countries sent oil prices close to $60 a barrel last month, but they have since pulled back amid some uncertainty over OPEC members’ adherence to the cuts.
Meanwhile, the rebound in prices appears to be spurring fresh drilling activity by shale producers in the U.S. And data due later Wednesday from the U.S. Department of Energy is expected to show a sharp rise in oil inventories there, with analysts in a Wall Street Journal survey expecting a 2.1-million-barrel rise in the week ended Jan. 20.
“A tighter market, improving productivity and a more accommodative policy from Saudi and [other Middle Eastern countries] should see U.S. crude production rebound strongly in 2017,” analysts at Citigroup wrote in a research report.
The American Petroleum Institute, an industry group, said oil inventories for the week rose 2.9 million barrels.
Though traders are skeptical, there have been early signs of compliance among members of OPEC and its allies with the November agreement to remove about 2% of the global supply from the market. Iraq’s oil minister said Monday that the country has cut production by 180,000 barrels a day. Saudi Arabia’s energy minister said the cartel and its partners had cut 1.5 million barrels a day collectively.
Nymex reformulated gasoline blendstock for February RBG7, -1.37% — the benchmark gasoline contract — fell 137 points to $1.5622 a gallon, while February diesel traded at $1.6350, 65 points lower.
ICE gasoil for February changed hands at $487.50 a metric ton, down a dollar from Tuesday’s settlement.
