Oil Edges Down After Last Week's Rally

By Sarah McFarlane and Alison Sider Features Dow Jones Newswires

Oil prices nudged lower Monday as investors paused after last week's rally.

Continue Reading Below

U.S. crude futures traded down 18 cents, or 0.36%, to $49.71 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 36 cents, or 0.65% to $55.26 a barrel.

Prices were buoyed last week by data showing tightening supplies. But analysts said investors will need more convincing for the U.S. benchmark to push above the $50 mark and stay there.

"I think that we need to see a drumbeat of positive information to drive the market higher," said Gene McGillian, research manager at Tradition Energy.

Hurricane Harvey, which shuttered refineries in Texas, has scrambled recent figures on U.S. supply and demand. As refineries restart and drivers settle into normal patterns, "we'll really see whether the longs in the market have the strength of conviction to continue to add to their positions," Mr. McGillian said.

Last week, the International Energy Agency raised its demand growth estimate for 2017, while the Organization of the Petroleum Exporting Countries said it had reduced output in August. The U.S. Energy Information Administration also lowered its projections for U.S. oil output in 2017.

Continue Reading Below

"It seems that at least part of the recent rally over the last few weeks has been due to stronger demand, all the major agencies revised up their forecasts for demand for this year," said Tom Pugh, commodities economist at Capital Economics.

The prospect that OPEC could extend its production-cut pact beyond March 2018 also supported prices, Mr. Pugh said, adding that growth in output from Nigeria and Libya was likely to push the cartel to cut for longer.

The latest U.S. oil-rig count published by oil-field services company Baker Hughes Inc. on Friday showed the number of rigs fell for the second week in a row, dropping by seven to 749.

Vienna-based consultancy JBC Energy said that the falling rig count should help underpin crude prices, but questioned how much higher prices could rally "before the gravitational forces of global supply and demand can start to form an upper limit."

Gasoline futures fell 0.23 cent, or 0.14%, to $1.6594 a gallon. Diesel futures fell 3.12 cents, or 1.73%, to $1.7676 a gallon.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

September 18, 2017 11:40 ET (15:40 GMT)