Oil futures took a breather in Asia on Tuesday as investors booked some profit in the wake of what has become crude's longest winning streak in seven and a half years in rising for eight straight sessions.
Volume is expected to muted ahead of the July 4 holiday in the U.S., perhaps exacerbating any declines as the global trading day progresses.
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On the New York Mercantile Exchange, light, sweet crude futures for delivery in August recently traded down 0.5% at $46.83 a barrel in the Globex electronic session. September Brent crude on London's ICE Futures exchange fell 0.5% to $49.41.
Oil's current rebound has followed five consecutive weeks of declines. Beyond being oversold, helping prices turn higher was recent U.S. data which showed modest drops in oil production, inventory and drilling activity--though at least some of that has been chalked up to bad weather.
"I think there's a decent production overhang building," said Bill Herbert, an analyst at Piper Jaffray, pointing to a growing backlog of wells which have been drilled but not yet tapped. "There's just too much capital being invested," he added. "I don't see any evidence of a more-constrained U.S. production outlook. In fact, I suspect it's the opposite."
Some, though, do think that the price declines seen in much of the first half of 2017 has made some U.S. oil producers hold back on expansion plans.
This week's government reports--out Thursday instead of the usual Wednesday because of Independence Day--will be highly scrutinized to "determine whether oil at around $42 is the line between pain and pleasure" for U.S. oil producers, said Ben Le Brun, an analyst at OptionsXpress.
It will be another week until there's fresh data from the Organization of the Petroleum Exporting Countries; June's production figures will be out July 12. The output cuts led by OPEC and Russia has thus far had little impact on pushing global inventories lower, helping fuel this year's price declines. But some have said that due to the massive size of the glut, the production cuts' effect would inevitably take a while to surface.
Bulls have also said production out of Libya and Nigeria is likely to plateau soon because output is near capacity limits in both locales. BMI Research said the absence of a fresh, steady stream of capital--coupled with unpredictable political climates--should prevent production from accelerating further.
Refined-product prices were broadly lower Tuesday in Asia. August Nymex reformulated gasoline blendstock was down 0.4% at $1.528 a gallon, diesel fell 0.5% to $1.5052 and July ICE gasoil eased 0.2% to $448 a metric ton.
Alison Sider contributed to this article
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(END) Dow Jones Newswires
July 03, 2017 23:23 ET (03:23 GMT)