Crude Prices Fall Ahead of OPEC Meeting
August 21 2017 - 5:16AM
Dow Jones News
By Christopher Alessi
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.
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.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
August 21, 2017 06:01 ET (10:01 GMT)
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