Crude futures pulled back in Asia toward where they were before a late-session gain in the U.S. on Wednesday after the latest Federal Reserve policy statement.
That as focus returned to the latest inventory data from America, which deepened skepticism that production cuts from the Organization of the Petroleum Exporting Countries and Russia aren't making a dent in elevated global stockpiles.
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Government data showed a modest decline for U.S. crude inventories and another unexpected increase in gasoline supplies as hopes about summer gas demand are frail. Over the last four weeks, sales fell 2.7% from a year earlier.
Meanwhile, U.S. crude exports continue to soar, aggravating the market's supply-and-demand imbalance. S&P Global Platts said U.S. oil has become more price-competitive, with West Texas Intermediate offered at a discount to Dubai crude, the main benchmark for Middle East supply to Asia. Exports the past month were 38% above outbound shipments the last eight weeks of 2016, the firm's data show.
"The market is looking for overall stock draws as evidence that the OPEC cuts are indeed driving global rebalancing," said Societe Generale. "This week's U.S. figures did not provide that evidence."
On the New York Mercantile Exchange, light, sweet crude futures for delivery in June recently traded down 0.2% at $47.71 a barrel in the Globex electronic session. July Brent crude on London's ICE Futures exchange fell 0.1% to $50.72.
As U.S. producers continue to unleash a steady, and strong, stream of shale oil into the market, it intensifies pressures on OPEC and Russia to continue keeping their output capped to prevent further price erosion. An official decision whether or not to extend curtailments will be announced when the group meets later this month.
Oil markets have largely priced in an extension, but if one doesn't happen crude could plunge below $40 a barrel, some analysts say. But prices may rise to $60 if the decision meets market expectations.
Still, the road to consensus on a new deal remains uncertain and bumpy as just one OPEC member rejecting an agreement would likely be enough to up-end the entire effort because the rest of the group would quickly jump back into "market-share-first" mode by pushing their output back up to pre-cut levels.
Such a development would have "dramatic implications for price levels," said analysts at J.P. Morgan.
After a 1.3% gain overnight, Nymex reformulated gasoline blendstock for June--the benchmark gasoline contract--fell 0.5% in recent Asia trading to $1.5259 a gallon. June diesel, which only rose modestly in the U.S. on Wednesday, eased 0.1% to $1.4716 in Asia while May ICE gasoil rose 0.2% to $441.25 a metric ton.
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(END) Dow Jones Newswires
May 03, 2017 23:27 ET (03:27 GMT)