Oil futures wavered between slight gains and losses Thursday, pulling back after topping $50 a barrel as investors weighed evidence that the world stock overhang is finally falling against rising OPEC production.
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U.S. crude futures recently traded down 7 cents, cents, or 0.14%, at $49.49 a barrel on the New York Mercantile Exchange. It pared gains from earlier trading when prices rose as high as $50.22 a barrel.
Brent crude, the global oil benchmark, rose 0.21% to $52.81 a barrel after hitting an 11-week high on London's ICE Futures exchange. The Brent front-month contract traded at a premium to the second-month, a market configuration known as backwardation, indicating a tightening in supplies available for immediate delivery.
"It got right up to the resistance line and it seems like the market didn't attract any new buying," said Gene McGillian, research manager at Tradition Energy.
The move higher came as the Organization of the Petroleum Exporting Countries reported that its oil output rose once again in July, in the latest challenge to its efforts to work down a global supply glut by cutting production. OPEC has cut production since January, in collaboration with other producers including Russia, with the aim of shrinking global stocks to their five-year average. This follows more than three years of excess supply.
OPEC's output rose by roughly 0.5%, to 32.87 million barrels a day last month, up by 172,600 barrels from June. The uptick, which was smaller than the prior month's increase, was driven by higher production in Libya, Nigeria and Saudi Arabia, according to OPEC's closely watched monthly market report.
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But investors continued to focus on indications that oil stockpiles are dropping in the U.S., along with Saudi Arabia's renewed commitment to cut shipments to buyers in Asia.
"This type of news a few weeks ago would indeed have been negative for the market," Peter Cardillo, chief market economist at First Standard Financial, said of the OPEC production figures. But "the market's perception has changed from negative to positive. Thereby, causing negative news to be shrugged off causing shorts to rethink their positions."
U.S. crude oil inventories fell by 6.5 million barrels to 1.15 billion barrels in the week ended Aug. 4, according to the Energy Information Administration. Crude stocks typically decline during the summer season, but the size of recent draws has been larger than usual, according to S&P Global Platts.
"We are seeing some stock draws and a return to backwardation, which is what OPEC was looking for, so the whole rebalancing is not done, but we are in the process, which you can see in the market structure," Olivier Jakob, head of energy consultancy Petromatrix, said.
Gasoline futures fell 0.32 cent, or 0.2%, to $1.6168 a gallon. Diesel futures were roughly flat at $1.6527 a gallon.
Biman Mukherji and Christopher Alessi contributed to this article
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(END) Dow Jones Newswires
August 10, 2017 11:44 ET (15:44 GMT)