Oil futures edged down on Monday, on concerns about major oil producers' wavering commitment to output caps and ahead of a meeting of the Organization of the Petroleum Exporting Countries.
Continue Reading Below
The two-day gathering in Abu Dhabi will discuss members' compliance level to the output pact the cartel agreed with 10 other oil suppliers, including Russia, in late 2016. The deal so far hasn't produced meaningful effects to tamp down global output or inventories.
Brent crude, the global oil benchmark, fell 1.2% to $51.79 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.2% at $48.98 a barrel.
Oil futures are being weighed down by, "concerns over compliance with the OPEC cuts," said Emily Ashford, director of energy research at Standard Chartered.
Investors are also anticipating the end of the summer driving season, which exhibited strong consumer demand for gasoline and low inventories. "That may change in the next few weeks, which makes the picture slightly more bearish than it has been," said Ms. Ashford.
Previously prices settled higher on Friday, amid a solid U.S. employment report and the Baker Hughes' weekly rig count showing a net decline in the past week of one in active U.S. oil-drilling rigs.
Continue Reading Below
One major development the market will be watching for out of the OPEC meeting is if Libya will join the agreement to cap output. The Africa supplier, along with Nigeria, were exempted from the initial deal because their output were marred by monthslong militant attacks.
However, as now both nations are pumping closer to their peak levels there is a growing view that they should also abide by production caps.
According to S&P Global Platts, the combined July output of both African producers was 590,000 barrels above October's. a baseline that deal participants used to determine their production caps. The OPEC's own official monthly report will be published on Thursday.
There is a "mix of optimism, and perhaps sustained hope, that more compliance can be achieved" at the OPEC meeting, said Barnabas Gan, an economist at the Singapore-based OCBC.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 1.23% to $1.63 a gallon. ICE gasoil changed hands at $481.00 a metric ton, down $7.00 from the previous settlement.
Write to Neanda Salvaterra at firstname.lastname@example.org and Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
August 07, 2017 06:30 ET (10:30 GMT)