Oil Ticks Higher on Output Concerns

By Christopher Alessi Features Dow Jones Newswires

Oil prices edged down Tuesday morning, as traders shifted their focus from OPEC's output deal back to U.S. production.

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Brent crude, the global benchmark, was down 0.16%, at $62.35 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down nearly 0.40%, at $57.24 a barrel.

Prices started to lose traction Monday, with Brent falling more than 2%, just days after the Organization of the Petroleum Exporting Countries agreed with other major producers, including Russia, to extend a deal to curb crude production through 2018.

"An agreement was fully priced in," said Ole Hansen, head of commodity strategy at Saxo Bank. Since OPEC and Russia confirmed Thursday they would continue to hold back crude output by nearly 2% through next year, the market has been "taking a breather" as it stabilizes, he said.

"Now the focus is shifting back to U.S. production," Mr. Hansen said. Investors and analysts are looking ahead to weekly U.S. production data from the Energy Information Administration, due Wednesday.

"The fact that prices are now lower than where they were prior to the confirmation [of the OPEC deal] is not that surprising given the level of expectation that had built up ahead of last week's meetings," said analysts at consultancy JBC Energy in a note Tuesday.

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Analysts at Commerzbank attributed "the price slide to profit-taking by speculative investors, who were holding almost record-high net-long positions" ahead of last week's meeting.

OPEC and ten producers outside the cartel first agreed a year ago to cap production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of reining in a global supply glut that has plagued the market since 2014 and boosting prices.

Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 2.84%, at $1.69 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $553.75 a metric ton, down 0.54% from the previous settlement.

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

Oil prices shifted from losses to slight gains Tuesday as traders and investors took a break from selling and turned their focus from OPEC's output deal to supply and demand.

U.S. crude futures gained 15 cents, or 0.26%, to $57.62 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 41 cents, or 0.66%, at $62.86 a barrel on ICE Futures Europe.

Investors and analysts are looking ahead to weekly U.S. production data from the Energy Information Administration due Wednesday. Analysts and traders surveyed by The Wall Street Journal expect that crude inventories fell 2.4 million barrels last week -- a sign that the glut of oil that has weighed on the market is shrinking.

The American Petroleum Institute, an industry group, said late Tuesday its data for the week showed a 5.5 million-barrel decrease in crude supplies, a 9.2 million-barrel jump in gasoline stocks and a 4.3 million-barrel rise in distillate inventories, according to a market participant.

Oil's move higher comes a day after both benchmarks tumbled as speculative investors began to liquidate bullish positions.

"The market is trying to make up its mind," said Ric Navy, senior vice president for energy futures at RJ O'Brien & Associates LLC. "If you're trying to figure out ultimately what the economy is going to do -- what the call on oil will be -- nothing jumping out at traders right now."

Oil prices have been mixed since the Organization of the Petroleum Exporting Countries agreed with other major producers, including Russia, to extend a deal to curb crude production through 2018. They rose Thursday and Friday after the deal was announced, but gains have been limited by the prospect that higher prices will spur more output from U.S. shale producers.

"An agreement was fully priced in," said Ole Hansen, head of commodity strategy at Saxo Bank. Since OPEC and Russia confirmed Thursday they would continue to hold back crude output by nearly 2% through next year, the market has been "taking a breather" as it stabilizes, he said.

"Now the focus is shifting back to U.S. production," Mr. Hansen said. Investors and analysts are looking ahead to weekly U.S. production data from the EIA.

"The fact that prices are now lower than where they were prior to the confirmation [of the OPEC deal] is not that surprising given the level of expectation that had built up ahead of last week's meetings," said analysts at consultancy JBC Energy in a note Tuesday.

Analysts at Commerzbank attributed "the price slide to profit-taking by speculative investors, who were holding almost record-high net-long positions" ahead of last week's meeting.

OPEC and 10 producers outside the cartel first agreed a year ago to cap production at around 1.8 million barrels a day lower than peak October 2016 levels, with the aim of reining in a global supply glut that has plagued the market since 2014 and boosting prices.

Gasoline futures rose 2.62 cents, or 1.55%, to $1.7184 a gallon. Diesel futures rose 1.94 cents, or 1.02%, to $1.9139 a gallon.

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

(END) Dow Jones Newswires

December 05, 2017 17:25 ET (22:25 GMT)