LONDON – Oil prices languished Wednesday morning, as investors appeared to, at least momentarily, cap robust gains from earlier in the week.
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Brent crude, the global benchmark, was down 0.43%, at $58.19 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate Futures were mainly flat, at $51.89 a barrel.
"The market is apprehensive about pushing [Brent] to $60 a barrel," said Geordie Wilkes, a research analyst at brokerage Sucden Financial Ltd. Mr. Wilkes said some investors worry that sending crude prices too high could incentivize an uptick in U.S. shale production and exacerbate a global supply glut.
"Any spike above $58 a barrel over the past 18 months hasn't really held, " he added.
At the same time, analysts said prices have also come down slightly as investors have cashed in on the recent gains, though Commerzbank described the situation as temporary.
Brent hit its highest settlement since July 2015 on Monday, closing at $59.02 a barrel, while U.S. crude futures posted their largest one-day advance of the year, to $52.22 a barrel.
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The steady increase in Brent in recent weeks has been driven in part by renewed market confidence in the Organization of the Petroleum Exporting Countries' plan to cut production and bring down the global supply overhang, as well as by fresh data from the International Energy Agency showing rising global demand growth.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap their production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of alleviating the global glut and boosting prices. The deal was extended in May through March 2018 and participants have recently indicated a willingness to potentially lengthen the deal through next year.
But WTI, the U.S. standard, has still lagged behind Brent, with the spread between the two benchmarks at its widest in about two years.
That is partly a result of lower refinery demand for crude oil in the wake of Hurricane Harvey, according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. But a "more pressing source of price angst," he noted, "stems from the unrelenting rise in U.S. crude output."
U.S. shale production is expected to grow for the 10th consecutive month in October, according to the U.S. Energy Information Administration.
Investors and analysts will be looking ahead to weekly data from the EIA Wednesday afternoon regarding U.S. crude inventory levels.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.80%, at $1.63 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $544.50 a metric ton, up 0.65% from the previous settlement.
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(END) Dow Jones Newswires
September 27, 2017 06:41 ET (10:41 GMT)