Oil prices wavered between gains and losses Wednesday after government data showed a decrease in U.S. crude inventories and as major oil producing nations met to discuss a potential extension of their deal to reduce supply.
U.S. crude futures recently traded down 13 cents, or 0.22%, to $57.86 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 11 cents, or 0.17%, to $63.50 a barrel on ICE Futures Europe.
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The U.S. Energy Information Administration reported that U.S. crude stockpiles fell by 3.4 million barrels week. Analysts attributed the drop to the closure of the Keystone Pipeline during the week and to an increase in refinery processing. Refiners processed 17 million barrels of oil a day last week -- an increase of 720,000 barrels a day from the same week last year, according to the EIA figures.
Analysts surveyed by The Wall Street Journal had anticipated a 1.9 million barrel drop, while the American Petroleum Institute, an industry group. reported Tuesday that U.S. crude supplies climbed by 1.8 million barrels for the week ended Nov. 24.
"I think crude looks constructive, especially because I feel OPEC will extend its cuts," said Andy Lipow, president of Lipow Oil Associates.
But some analysts said the outlook is bearish. The drop in crude inventories may prove to be a one-off, since TransCanada Corp. has said it has already restarted its Keystone pipeline, which had been shut down following a leak earlier in November. That could send more oil flowing into the main storage hub in Cushing, Okla.
U.S. producers also continued to ramp up, taking advantage of oil's recent gains to push output to a fresh weekly record. Production rose by 20,000 barrels a day to 9.682 million barrels a day.
And the EIA also reported that gasoline and diesel inventories both grew last week, even as gasoline exports rose to a record 1.2 million barrels a day. Gasoline stockpiles increased by 3.6 million barrels and diesel inventories rose by 2.7 million barrels.
"We're not burning gasoline and distillate the way refiners wish," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.
Investors are also increasingly nervous that the coalition of countries that opted to reduce output is fracturing. The Organization of the Petroleum Exporting Countries and allies including Russia first agreed a year ago to reduce global crude output by nearly 2% from peak October 2016 levels in an effort to boost prices. The group is expected to announce Thursday whether to extend its agreement, which is set to expire in March.
Saudi Arabia, the most influential member of OPEC, is pushing for oil prices to go higher as the kingdom attempts an economic transformation.
Russia, an external producer, has signaled that it prefers a shorter agreement that factors in a possible ramp up in production by U.S. shale oil firms.
Ahead of the meeting, investors increased their net long speculative positions on crude to near record levels, say market participants.
Some analysts expect OPEC and external producers to compromise and settle on a shorter agreement even if it could upset the market.
"We expect the meeting to result in a prolongation of the current cuts, but with a decent chance of the group communicating some type of dedicated review option to increase its flexibility," said analysts for JBC Energy in a recent note.
Gasoline futures fell 1.14 cents, or 0.64%, to $1.7606 a gallon. Diesel futures fell 1.06 cents, or 0.54%, to $1.9401 a gallon.
--Benoit Faucon, Summer Said and Christopher Alessi contributed to this article.
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(END) Dow Jones Newswires
November 29, 2017 11:58 ET (16:58 GMT)