Oil Prices Settle Higher

By Christopher Alessi Features Dow Jones Newswires

Oil prices were down Thursday morning on fresh U.S. data showing a further ramp-up in shale production.

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Brent crude, the global benchmark, fell 0.3%, to $50.12 a barrel, in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.4%, at $46.61 a barrel.

U.S. crude output rose 79,000 barrels a day, to 9.502 million barrels a day, during the week ended Aug. 11, according to weekly data released Wednesday by the U.S. Energy Information Administration.

That offset the EIA's more bullish data, which showed a further drawdown in U.S. oil stocks. Crude stocks fell by nearly 9 million barrels last week, the ninth reduction in 10 weeks.

But oil prices closed Wednesday at a three-week low, with WTI and Brent down 1.6% and 1.0%, respectively. U.S. crude futures gained nearly 9% in July, in their largest monthly percentage gain since April 2016.

"The recent price increase was strongly supported by speculative activity. Now this support seems to be breaking down," said Eugen Weinberg, head of commodity research at Commerzbank.

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Mr. Weinberg said the market was now starting to act in "a more logical way," suggesting the recent drawdown in U.S. inventories was nothing more than a short-lived "optical illusion."

Moreover, the EIA data showed an uptick in gasoline and distillate stocks, which analysts at oil broker PVM Associates called "surprise builds."

The selloff also "received a further boost from Libya" after its Sharara oil field reportedly came back online, according to PVM.

Libya and Nigeria were exempted from the Organization of the Petroleum Exporting Countries' deal to cut output because their oil industries had been disrupted by civil strife.

OPEC and 10 other oil producing nations, including Russia, agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels in an effort to rein in a global supply glut and boost prices. Despite an extension of the deal in May, through March 2018, the market has remained subdued.

Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.8% at $1.4619 a gallon. ICE gas oil changed hands at $462.25 a metric ton, down 1.8% from the previous settlement.

Write to Christopher Alessi at christopher.alessi@wsj.com

U.S. crude oil prices rose Thursday, snapping a three day losing streak as the market rebounded from a three week low amid signs that a supply glut is shrinking.

U.S. crude future rose 31 cents, or 0.66%, to $47.09 a barrel. Brent, the global benchmark, rose 76 cents, or 1.51%, to $51.03 a barrel on ICE Futures Europe.

"It just looks like a bounce off the recent weakness," said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy trading desk.

U.S. government data released Wednesday showed that the amount of stored crude oil in the U.S. fell by nearly 9 million barrels last week. Oil stockpiles have fallen in nine of the last 10 weeks, and while stockpiles are still above the five year average, they stand below last year's level.

Still, prices tumbled after those figures from the U.S. Energy Information Administration were released, because the data also showed that U.S. oil production topped 9.5 million barrels a day.

The prospect of rising oil output in the U.S. "took the wind out of the sails" of the bullish data, said Gene McGillian, research manager at Tradition Energy.

But signs of a tightening market helped lift prices Thursday, analysts and investors said. Contracts for Brent crude to be delivered in October have been trading higher than the subsequent months -- a market configuration known as backwardation, indicating a tightening in supplies available for immediate delivery.

OPEC and 10 other oil producing nations, including Russia, agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels in an effort to rein in a global supply glut and boost prices. Despite an extension of the deal in May, through March 2018, the market has remained subdued.

Also helping to lift prices Thursday was a fire in a unit of Royal Dutch Shell PLC's Deer Park refinery. The company said the fire has been extinguished. Still, the disruption could see "a little bit of tightness come back into the gasoline market," said John Kilduff, founding partner at Again Capital. That helped lift prices for fuel and oil followed, Mr. Kilduff said.

Gasoline futures rose 2.31 cents, or 1.48%, to $1.5869 a gallon. Diesel futures rose 0.76 cents, or 0.48%, to $1.5820 a gallon.

Write to Alison Sider at alison.sider@wsj.com and Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

August 17, 2017 16:42 ET (20:42 GMT)