Oil prices fell Tuesday as investors cautiously awaited the effects from last week's decision to extend a crude-oil production cap amid a supply glut.
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In thin trading due to an Asian holiday, West Texas Intermediate crude for July delivery on the New York Mercantile Exchange recently traded 0.1% lower at $49.77 a barrel in the Globex electronic session. Brent crude, the global benchmark, eased 0.4% to $52.07.
Crude futures slumped initially after the Organization of the Petroleum Exporting Countries announced Thursday to extend the deal through March 2018, reflecting market disappointment that the cuts weren't deeper.
Analysts said the decline was due partly to speculative investors unwinding their long positions ahead of the OPEC meeting.
Oil prices have since recovered some ground, steadying as market participants come to terms with an expected gradual trimming of excess global inventories.
The direction of oil prices in the near term will likely depend on how much of a difference the cap rollover makes to global inventories.
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Moreover, with the onset of the U.S. driving season, investors will be watching whether higher demand draws down oil stockpiles in the coming weeks, said Gnanasekar Thiagarajan, director of Commtrendz Risk Management.
Investors will also be keeping an eye on U.S. inventory data due Thursday, which have fallen for six straight weeks so far. Global supplies continue to remain way above a five-year average, however, and how soon they decline will likely be instrumental in helping OPEC members figure out their next steps.
Data from oil-field services company Baker Hughes have lately shown a deceleration in the growth of U.S. oil rigs even as drilling activity in the U.S. has risen for the 19th consecutive week, continuing to pose a threat to OPEC's goal of reducing oil inventories.
"Markets will certainly be very focused on data releases," OM Financial's Stuart Ive said.
Nymex reformulated gasoline blendstock, the benchmark gasoline contract, fell 0.3% to $1.60 a gallon. ICE gasoil changed hands at $458.00 a metric ton, down $3.75 from the previous settlement.
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(END) Dow Jones Newswires
May 30, 2017 01:35 ET (05:35 GMT)