Oil prices held steady Tuesday on the heels of seven-month lows, with investors remaining dubious about how effective the production cuts spearheaded by Saudi Arabia and Russia have been and will be.
Futures have skidded 17% since New Year’s, which is when the output-cap agreement went into effect. The deal’s stated objective has been bringing global crude inventories down to five-year averages.
But the results have been largely disappointing thus far.
Morgan Stanley pointed out that identifiable oil inventories — both oil and products in the Organization for Economic Cooperation and Development, China and selected other non-OECD countries — increased some at a rate of around 1 million barrels a day in the first quarter.
“OPEC still have a long way to go in rebalancing the market,” said Stuart Ive, a client manager at OM Financial.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July
recently traded up 0.2% at $44.27 a barrel in the Globex electronic session. August Brent crude
on London’s ICE Futures exchange added 0.2% to $47.02.
As midweek nears, it’s time for weekly U.S. data to again take center stage. Various energy-monitoring bodies, such as the International Energy Agency, of late have projected U.S. crude output will continue rising through next year–increases which stands to negate the bulk of the ongoing OPEC-led cuts.
Analysts surveyed by S&P Global Platts estimate U.S. oil inventories fell 2 million barrels last week, with gasoline supplies dropping 750,000. Stated inventories in the prior two weeks’ government reports have been higher than analysts anticipated.
Nymex reformulated gasoline blendstock for July
was recently up 0.2% at $1.4534 a gallon, diesel rose 0.2% to $1.4212 and ICE gasoil fell 0.7% to $421.25 a metric ton.