Oil prices edged down Monday morning as investors awaited the results of an OPEC meeting today and new data later this week on U.S. inventory levels.
Brent crude, the global benchmark, fell 0.49% to $52.46 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.27% at $48.38 a barrel.
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The Organization of the Petroleum Exporting Countries was set to hold a technical meeting in Vienna Monday to discuss compliance levels with the cartel's production cut deal.
"Given rising OPEC production over recent months, there will be some concerns by member countries over slipping compliance," analysts at ING Bank wrote in a note Monday morning.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap production at around 1.8 million barrels a day lower than peak October 2016 levels, with the goal of reducing the global oil glut and boosting prices. The deal was extended in May until March 2018.
But compliance with the agreement fell to its lowest level this year in July, at 75%, due to higher output from Iran, Equatorial Guinea, Gabon, Algeria and the United Arab Emirates, according to the International Energy Agency's latest monthly report.
OPEC crude production also increased last month due to an unexpected surge in production in Libya and Nigeria, according to a recent report form the cartel. The member countries were exempt from the compliance deal because their oil industries had been damaged by internal strife.
Investors Monday were also looking ahead to see whether weekly U.S. data on Wednesday would confirm a further drawdown in U.S. crude stocks, according to Giovanni Staunovo, a commodities analyst at UBS Wealth Management.
"There is the risk that inventories start to increase again" if the recent decline in stocks was primarily fueled by seasonal factors like increased car usage, Mr. Staunovo said.
The U.S. Energy Information Administration said last week that crude inventories had been reduced by 9 million barrels in the week ended Aug. 11, bringing the total drawdown since March to 69 million barrels.
At the same time, oil-field services firm Baker Hughes Inc. said Friday that the number of rigs drilling for oil in the U.S. fell by five in the previous week, a further sign that drillers are responding to the lower price environment by pulling back.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.74% at $1.5217 a gallon. ICE gasoil changed hands at $479.00 a metric ton, up 1.43% from the previous settlement.
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(END) Dow Jones Newswires
August 21, 2017 06:01 ET (10:01 GMT)