London
Oil traded near $47 a barrel before data forecast to show a further reduction in US crude inventories, which would signal that a global surplus is receding.
Futures in New York were little changed after slumping 2.4 per cent 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 oilfield 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 US, offsets production cuts by the Organisation of Petroleum Exporting Countries and its allies. Still, US 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 US 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 US inventories will continue.”
West Texas Intermediate for September delivery, which expires on Tuesday, slipped 8 cents to $47.29 a barrel on the New York Mercantile Exchange. Total volume traded was about 13 per cent below the 100-day average. The more-active October contract fell 9 cents to $47.44 at 1:39pm in London.
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 per cent, to $51.66 on Monday. The global benchmark crude traded at a premium of $4.06 to October WTI.
US 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.
US commercial crude inventories have fallen by almost 13 per cent from their March peaks, to 466.5 million barrels.
The Organisation of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back about 1.8 million barrels per day (bpd) of output between January this year and March 2018 in order to tighten supplies and prop up prices.
But oil production elsewhere has been rising, blunting the impact of output cuts by Opec and its allies.
US crude production has broken through 9.5 million bpd, its highest since July 2015. Some analysts say US oil output growth will slow as energy firms cut the number of rigs drilling for oil. So far, however, the increase in US production has been relentless with increasing volumes from shale, particularly from the giant Permian basin in Texas and New Mexico.
