Oil prices were mainly flat Wednesday morning, as investors awaited new U.S. government data that was expected to show an increase in U.S. crude inventories last week.
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Brent crude, the global benchmark, was up marginally, by 0.04%, to $48.86 a barrel, in London mid-morning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading flat, at $46.40 a barrel.
The American Petroleum Institute projected Tuesday that U.S. crude stocks had grown by 1.6 million barrels in the week ended July 14. If the estimate is confirmed by official U.S. data later Wednesday, it would constitute the first inventory rise in two weeks. The market had initially been expecting a drawdown of roughly 3 million barrels.
"A number similar to the API's is likely to apply further pressure on prices," analysts at ING Research wrote in a note Wednesday morning.
However, the API also forecast gasoline stockpiles fell by more than 5 million barrels, while distillate stocks fell by 2.9 million barrels.
Those projections, if confirmed, would be "rather supportive for the whole oil complex," said Giovanni Staunovo, a commodity analyst at UBS. In this case, Mr. Staunovo said, he would mainly anticipate some "near term" volatility in crude prices.
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The resilience of the U.S. oil industry has been a concern for the Organization of the Petroleum Exporting Countries, the global oil cartel that controls over 40% of the world's crude oil. For more than three years, the group has been grappling with low prices as global supply outpaced demand.
Accelerating output from the U.S., where producers are improving their efficiency, has made matters worse. In May, daily U.S. crude production averaged 9.32 million barrels, a 6.3% on-year increase, while prices have only risen by $0.85, or 1.2%, compared with the same month last year.
OPEC and other producers outside the cartel including Russia have teamed up to pare back their production through March 2018 in hopes of lifting prices, but the results have been mixed.
Market players will also be eyeing the outcome of an OPEC meeting next Monday, when delegates will discuss the possibility of including two previously exempted OPEC members, Nigeria and Libya, into the production curtailment plan.
"It is likely that the focus of both participants and observers will increasingly shift to compliance with supply accords over the coming months, and how to counter a historical tendency for compliance to decline over time," analysts at JBC Energy said of the upcoming OPEC meeting in St. Petersburg.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was up 0.62%, to $1.5504 a gallon. ICE gasoil changed hands at $448.75 a metric ton, up 0.39% from the previous settlement.
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(END) Dow Jones Newswires
July 19, 2017 05:35 ET (09:35 GMT)