Oil prices edged higher Wednesday morning, as investors looked ahead to the weekly release of official data on U.S. crude inventory levels due later in the day.
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Brent crude, the global benchmark, rose 0.36%, to $52.33 a barrel in London in midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.37% at $49.35 a barrel.
If the U.S. Energy Information Administration confirms an American Petroleum Institute forecast that showed commercial crude supplies fell by 7.8 million barrels last week, it would constitute the sixth straight week of declines in U.S. oil inventories.
That would be welcome news for a market that has been dragged down by a continuing supply glut, aided in part by consistently high U.S. production over the past few years.
But despite the potential pullback, "the bigger picture--namely, continued production growth--remains unchanged," noted Commerzbank analysts in a note Wednesday. "By the end of 2018, [U.S.] output is set to climb to over 10 million barrels per day," the analyst wrote.
The persistent global oversupply pushed members of the Organization of the Petroleum Exporting Countries and other big producers outside the cartel to implement a deal late last year aimed at reducing oil output. However, the agreement, renewed in May, has so far failed to rein in the glut, due to weak compliance by some cartel members and consistent U.S. output.
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Earlier this week, Saudi Arabia--OPEC's largest member and the world's biggest crude producer--and other deal participants such as Russia, implored Iraq, the United Arab Emirates and others to better conform to the output cuts.
The Saudis have also committed to cutting exports to most buyers in Asia--the world's largest oil consuming region--by up to 10% in September to comply with the deal, two Saudi oil officials confirmed Tuesday.
Still, experts at oil broker PVM Group said the export pullback "may bear little impact" on rebalancing the market. "Such are the intense competitive pressures in the key Asian region that any shortfall in Saudi supplies will most likely be filled by other producers," PVM wrote in a note Wednesday.
Meanwhile, markets were bracing for a potential impact from escalating tensions between North Korea and the U.S. A "loss of confidence" in the Asian region could weigh on global growth and subsequently on oil prices, said Olivier Jakob, an analyst at research group Petromatrix.
Investors were also looking to monthly oil reports later this week from OPEC and the International Energy Agency.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.28% at $1.162 a gallon. ICE gasoil was at $483.75 a metric ton, roughly on par with the previous settlement.
Summer Said contributed to this article.
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Oil prices wavered between gains and losses Wednesday morning as investors evaluated U.S. data showing that oil inventories fell but gasoline stockpiles grew last week.
The U.S. Energy Information Administration reported that the amount of oil in storage fell for the sixth straight week, dropping by 6.5 million barrels in the week ended Aug. 4. Taken as a sign that the global oil glut is easing, the steady depletion of crude inventories has pushed prices higher over the past month.
U.S. crude futures recently traded up 9 cents, or 0.2%, at $49.26 a barrel on the New York Mercantile Exchange. Brent, the global benchmark rose 22 cents, or 0.4%, to $52.36 a barrel on ICE Futures Europe.
But the amount of gasoline in storage rose by 3.4 million barrels as refiners continued to churn out fuel at high rates, raising concerns about fuel demand as the summer wanes.
"Gasoline is a double blinking light for the whole complex," said Bob Yawger, director of the futures division at Mizuho Securities USA. "They're making a lot of gasoline -- they're using a lot of crude, but at the same time, they're making a crazy amount of product."
U.S. refinery utilization rose to 96.3% last week, and refiners churned nearly 17.6 million barrels of oil into fuel. But demand ebbed from the previous week's record high.
Traders and analysts had expected stockpiles of products to fall as the summer season prompted drivers to consume more fuel while traveling.
"At the end of the day, that's a bit of a counter," said John Saucer, vice president of research and analysis at Mobius Risk Group. "And that may explain why we weren't off to the races, so to speak, when the numbers came out."
Oil prices have been stuck in a tight range this month, hovering below $50 a barrel as investors try to gauge how much the Organization of the Petroleum Exporting Countries will be able to influence global supply.
Earlier this week, Saudi Arabia -- OPEC's largest member and the world's biggest crude producer -- and other deal participants such as Russia, implored Iraq, the United Arab Emirates and others to better conform to the output cuts agreed upon last year.
However, the meeting ended with little impact on the market. Participants remain skeptical that members of the deal will be able to adhere to the planned reductions in output, especially as those exempt from the agreement, including Libya and Nigeria, increase production.
Meanwhile, traders are keeping a close eye on production levels in the U.S. As prices have risen, U.S. shale has responded by increasing output more quickly than many expected this year. Concerns that U.S. producers will once again lock in prices on oil gains have keep U.S. futures subdued, analysts said.
"Right now it has much more to do with the inventory numbers and much more to do with how much hedging is being done," Mr. Saucer said.
Gasoline futures fell 0.6% to $1.6109 a gallon and diesel futures rose 0.4% to $1.6355 a gallon.
--Christopher Alessi contributed to this article.
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(END) Dow Jones Newswires
August 09, 2017 12:35 ET (16:35 GMT)