Oil futures pulled back in Asian trading Thursday as investors trimmed their bets ahead of next week's meeting of the Organization of the Petroleum Exporting Countries.
At that gathering, the group is expected to agree to an extension of ongoing production cuts for cartel members and other producers such as Russia.
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The reductions, which began in January, have yet to make a notable dent in global supplies. Inventories continue to sit above five-year averages, the level that major producers want oil stocks to return to in hopes of boosting prices, which remain less than half of where they were three years ago.
After settling on Wednesday at their highest levels in nearly a month, light, sweet crude futures for delivery in June were recently down 0.3% at $48.91 a barrel in the Globex electronic session. July Brent crude on London's ICE Futures exchange fell 0.3% to $52.07 a barrel.
Prompting Wednesday's gains was news U.S. oil production last week saw its first decline in three months. Steadily rising output has been key in damping expectations that the OPEC-led output cuts would successfully boost prices.
There is uncertainty that price will rise even if the curtailments are extended.
Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia, is concerned about what will happen to oil prices once the pact ends--whether mid-year as under the current deal or perhaps early 2018 if extended. He said although prices may rise next quarter, declines could resume afterward.
"Given that the market is pricing in a rollover [of the OPEC-led cuts], there is unlikely to be a significant short-term price boost" if that is announced next week, said BMI Research. "But continued intervention will tighten the market, which in turn will be price-supportive."
Meanwhile, Nymex June gasoline futures eased 0.2% to $1.60 a gallon, diesel declined 0.2% to $1.5306 and June ICE gasoil slid 0.9% to $459.50 per metric ton.
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(END) Dow Jones Newswires
May 18, 2017 01:10 ET (05:10 GMT)