Oil prices gave back gains Tuesday despite reports that Saudi Arabia is planning to cut exports to Asia next month.
Continue Reading Below
Light, sweet crude for September delivery was recently down 21 cents, or 0.4%, to $49.18 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, lost 21 cents, or 0.4%, to $52.16.
Saudi Arabia -- the world's largest producer of crude oil -- is expected to cut sales of oil supplies to Asia by up to 10% in September, to tackle the global crude glut, according to multiple reports Tuesday.
However, oil prices wavered between gains and losses as investors stayed focused on the challenges the global oil cartel has faced in lowering supply this year.
The Organization of the Petroleum Exporting Countries and 10 producers outside the cartel -- including Russia -- agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels. The oil-market reaction has proved muted, in part due to rising U.S. production, though poor compliance by some participants in the OPEC output-cap agreement has also contributed.
The Saudis "continue to do their best to support the market by cutting exports," said Ole Hansen, head of commodity strategy at Saxo Bank.
Continue Reading Below
OPEC is in the second day of a two-day meeting in Abu Dhabi to discuss compliance. The issue has been particularly "a struggle for Iraq lately, " said Saxo's Mr. Hansen. He said he would be looking to see whether the summit participants address the issue.
"The reality is OPEC has no way of enforcing the production caps," said Gao Jian, an analyst at SCI International. "That has been the problem of the cartel for many years now."
Also expected to be high on the agenda is the possible inclusion of Libya in the output-cap effort. The North African supplier was given a pass when the deal was first forged last fall because production had been curtailed by militant attacks on oil facilities. But with daily output back to 1 million barrels, other OPEC members are lobbying for Libya to also bridle its production. Nigeria, another OPEC member originally exempt from the pact, recently agree to begin reining in output.
"If nothing new is brought to the table in the OPEC meeting and investors are left empty-handed once again," oil may start to sell off again, said Lukman Otunuga, FXTM research analyst.
Saudi Arabia first announced late last month plans to limit oil exports to 6.6 million barrels a day in August. That declaration came as OPEC has struggled to reduce the oversupply of oil in the global market that has weighed on prices for three years.
Investors and analysts were also looking ahead to weekly U.S. inventory data Wednesday, as well as monthly oil reports from OPEC and the International Energy Agency later in the week.
Gasoline futures fell 1% to $1.6131 a gallon and diesel futures dropped 0.6% to $1.6298 a gallon.
Stephanie Yang contributed to this article.
Write to Christopher Alessi at firstname.lastname@example.org and Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
August 08, 2017 11:39 ET (15:39 GMT)