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Oil prices extended losses on Tuesday

Oil prices slide after API reports 14.2 million barrel US crude stockpile increase; gasoline stocks also rise

Crude plunges off strong dollar 

Oil prices extended losses on Tuesday after an industry group reported a far larger rise in weekly U.S. crude stockpiles than anticipated.

U.S. crude oil in storage rose by 14.2 million barrels last week, according to the American Petroleum Institute. That was more than five times analysts’ forecasts for a 2.5-million barrel increase.

Gasoline stocks rose by 2.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.1-million barrel gain.

U.S. crude was trading at $51.72 after ending Tuesday’s trade down 84 cents, or 1.6 percent, at $52.17.

Benchmark Brent crude was down $1.03, or 1.9 percent, to $54.69 a barrel by 4:50 p.m. (2150 GMT).

Concerns that U.S. gasoline consumption is stalling weighed on futures. U.S. gasoline prices fell 2.3 percent.

Commodities tomorrow:

Commodities tomorrow: Strong support for oil at $53   

Futures were pressured on Tuesday by sluggish demand and evidence of a burgeoning revival in U.S. shale production that could complicate efforts by OPEC and other producers to reduce a supply glut.

Gasoline stockpiles rose by almost 21 million barrels in the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade, according to official inventory data.

“It’s a supply-driven setback … We are within 2 million barrels of the record in U.S. gasoline stocks that we saw last February,” said Tony Headrick, energy markets analyst at CHS Hedging. “A strong build in inventory reports could weigh on gasoline in a seasonal timeframe where gasoline demand is weak.”

Inventory estimates from trade group the American Petroleum Institute are due on Tuesday afternoon. U.S. government data is reported Wednesday.

Gasoline futures fell below the 200 day moving average on a continuous chart, Headrick noted.

The U.S. dollar rose 0.4 percent against a basket of currencies, making dollar-denominated commodities like crude oil more expensive to holders of other currencies.

Prices have been supported for two months as the Organization of the Petroleum Exporting Countries and other exporters have tried to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017. OPEC and Russia have together cut at least 1.1 million bpd so far.

Another bullish sign emerged on Tuesday as crude oil exports from southern Iraq fell in January to 3.275 million barrels per day (bpd) from 3.51 million bpd in December, according to two oil executives.

Iraq, OPEC’s second largest producer, has been a concern among analysts because it has a harder time managing output than some other cartel members. Its leaders also raised issues with the coordinated production cuts from their inception.

‘Encouraging’ signs that OPEC production has been cut back: IEA

‘Encouraging’ signs OPEC production has been cut back: IEA   

But market players are concerned that rising U.S. production and signs of slowing demand growth could offset these efforts.

“The general perception is that OPEC is cutting production, which is supporting prices, but high stock levels, rising rig counts and growing U.S. production are capping gains,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

Societe Generale oil analyst Michael Wittner said U.S. shale oil output was recovering faster than expected.

“Rig counts are increasing at an accelerating pace, and given the technological advances of the past three years, this should translate into significant supply,” Wittner said.

“U.S. shale is coming back, and it’s coming back strong.”

U.S. oil production is expected to rise 100,000 barrels per day to 8.98 million barrels in 2017, 0.3 percent less than previously forecast, according to a monthly U.S. government report released on Tuesday.

Chinese oil demand grew in 2016 at the slowest pace in at least three years, Reuters calculations showed, the latest sign of slower demand from the world’s largest energy consumer.

Correction: This story has been corrected to reflect the total stockpile build reported by API was 14.2 million barrels.

— CNBC’s Tom DiChristopher contributed to this report.

US Crude settles at $52.75


US crude settles at $52.75, down 43 cents, after EIA reports bearish oil, fuel stockpile data

Build in crude oil inventories

Build in crude oil inventories   

Oil prices fell on Wednesday after earlier shrugging off a report from the U.S. Energy Information Administration that showed the nation’s crude inventories rose and gasoline stocks increased sharply.

U.S. light crude settled down 43 cents at $52.75. Benchmark Brent crude fell 25 cents a barrel to $55.19 by 2:54 p.m. ET (1954 GMT).

Futures fell early in the day after builds in U.S. inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters. However, they turned positive after the EIA report amid market strength.

Again Capital founding partner John Kilduff said there was little to cheer in the report, but oil futures can’t fight the strength on Wall Street on a day when the Dow crossed 20,000 for the first time ever and markets were broadly higher.

“It was a very bearish report, and it’s a cloud over this market, but it’s no asset class left behind at the moment,” Kilduff said.

Trump revives pipelines: Who wins & loses?

Trump revives pipelines: Who wins & loses?   

U.S. crude stockpiles rose by 2.8 million barrels in the week through Jan. 20, matching analysts expectations and roughly in line with an earlier report from the American Petroleum Institute.

U.S. gasoline futures fell to a session low after EIA reported gasoline stocks rose by 6.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 498,000-barrel gain. It pared losses shortly after the report came out.

Distillate stockpiles, which include diesel and heating oil, increased by 76,000 barrels, versus expectations for a 1 million-barrel drop, the EIA data showed.

Oil prices have found support in recent weeks from plans by the Organization of the Petroleum Exporting Countries and other producers to reduce output.

Around 1.5 million barrels per day (bpd) has already been taken out of the market from about 1.8 million bpd agreed by oil majors starting on Jan. 1, energy ministers said on Sunday, as producers look to reduce oversupply.

Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. The amount remaining equates to about 60 days of world oil consumption.

Bearish on oil for the short term: Pro

Bearish on oil for the short term: Pro   

But as OPEC is cutting, U.S. shale output is rising.

U.S. oil production has increased by more than 6 percent since mid-2016, although it remains 7 percent below its 2015 peak. Output is back to levels reached in late 2014, when strong U.S. crude output contributed to a crash in oil prices.

President Donald Trump‘s promise to support the U.S. oil industry has encouraged analysts to revise up their forecasts of growth in U.S. oil production, which is already benefiting from higher prices.

A push by Republicans in the U.S. House of Representatives for a shift to border-adjusted corporate tax could help push U.S. crude prices higher than global benchmark Brent, triggering large-scale domestic production, according to Goldman Sachs.

— CNBC’s Tom DiChristopher contributed to this report.

New Washington Reports Shows No Crude Oil by Rail in Grays Harbor


A new report from the Washington State shows no crude oil traveled by railroad to Grays Harbor County in the 4th quarter of 2016. The Department of Ecology was tasked with releasing the “Crude Oil Movement by Rail and Pipeline Quarterly Report” by code adopted last summer (Chapter 173-185 WAC) which established reporting standards for facilities that receive crude oil by rail and pipelines that transport crude oil in or through the state. Additionally, the rule identified reporting standards for Ecology to share information with emergency responders, local governments, tribes, and the public.

This quarterly report for the reporting period October 1, 2016, to December 31, 2016, provides aggregated information on crude oil transported by rail to facilities in Washington, information on crude oil movement by pipeline, and information on crude oil spilled during transport and delivery for rail and pipeline.

In addition, information is provided about the volume of crude oil transported into the state by vessel, and eventually by pipeline. Although the report said that pipeline data was delayed and will be added later this month.

View the entire report here:

A summary of the data shows:

  • Two regions of origin are reported: Alberta and North Dakota.
  • Three types of crude oil are reported: heavy, medium, and light.
  • The total volume of crude oil transported by rail during the quarter was 14,708,705 barrels (617,765,610 gallons).
  • The average weekly volume of crude oil transported by rail was 1,050,622 barrels (44,126,124 gallons).
  • The total number of rail cars moving crude oil by rail was 21,603 cars.
  • The average number of rail cars per week moving crude oil by rail was 1543 cars.
  • 1% of crude oil transported by rail was heavy crude, 5% was medium crude, and 94% was light crude.
  • Alberta was the region of origin for 6% of crude oil transported by rail, while North Dakota was the region of origin for 94% of crude oil transported by rail.

US Crude up 29 cents


US crude settles at $51.37, up 29 cents as IEA sees oil market tightening

Jonathan Alcorn | Reuters
Oil jack pumps are pictured in the Kern River oil field in Bakersfield, Calif.

Oil prices edged higher on Thursday, but swelling U.S. crude stockpiles limited the rebound from a one-week low after the International Energy Agency said oil markets had been tightening even before cuts agreed by OPEC and other producers took effect.

The IEA said that while it was “far too soon” to gauge OPEC members’ compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.

U.S. West Texas Intermediate crude oil settled up 29 cents at $51.37 per barrel, having dropped to a one-week low on Wednesday at $50.91 a barrel.

International benchmark Brent crude was up 34 cents at $54.26 a barrel by 2:33 p.m. ET (1933 GMT), after closing down 2.8 percent in the previous session.

A strong U.S. dollar limited oil’s advance.

RBC strategist: Oil will grind higher

RBC strategist: Oil will grind higher   

Prices tumbled to session lows after U.S. Energy Information Administration (EIA) data showed crude inventories rose unexpectedly last week as refineries sharply cut production.

U.S. commercial crude inventories rose by 2.3 million barrels in the week through Jan. 13 to 485.5 million barrels, well above the expectations of a 342,000-barrel decline.

The data also showed much larger-than-expected increases in stocks of gasoline and a surprise drop distillates inventories. Stockpiles of gasoline in the U.S. East Coast swelled to the highest weekly levels on record for this time of year, when refiners typically begin storing barrels ahead of summer driving season.

“At the end of the day, the focus is on the bigger picture and the bigger picture still looks positive which is why we are still up,” said Scott Shelton, energy specialist at ICAP in Durham, North Carolina.

“The bigger picture includes the OPEC/non-OPEC supply cuts and the IEA report, which was pretty supportive.”

Oil prices have gyrated this year as the market’s focus has swung from hopes that oversupply may be curbed by output cuts announced by the Organization of the Petroleum Exporting Countries and other producers to fears that a rebound in U.S. shale production could swamp any such reductions.

The head of the IEA, Fatih Birol, said in Davos, Switzerland, that he expected U.S. shale oil output to rebound by as much as 500,000 barrels per day over the course of 2017, which would be a new record.Oil and Gas

Futures Now: Oil slips on supply concerns

Futures Now: Oil slips on supply concerns   

It raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets.

Still, analysts warned that keeping the cuts was crucial, particularly as a resilient U.S. shale industry threatened to add more barrels to the market.

“Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive,” PVM Oil Associates analyst Tamas Varga said in a note.

OPEC, which is cutting oil output alongside independent producer Russia for the first time in years, wants a lasting partnership with Moscow, Saudi Energy Minister Khalid al Falih told Reuters. He also said extending the deal for a full year if the market rebalances was not needed.

OPEC itself said its cuts would help balance the market, and said its output had already fallen in December. But it also pointed to the possibility of a rebound in U.S. output amid higher oil prices.

Crude Oil Prices under Pressure amid Increasing Production

Alexander Gorodezky

Economic Calendar

After generating positive results last week amid traders’ optimism over the production cut from major producers, including Saudi Arabia and Kuwait, crude oil prices came back under pressure in Monday’s trade, thanks to the threat of increasing Iran’s exports and rising U.S. supplies. Iran started increasing its exports over the last couple of months from oil held in tankers at sea.

Iran sold almost 13 million barrels of crude oil held in tankers at sea, indicating a smart move of enhancing its market share, when fellow producers are slashing their supplies. While Iran’s biggest rivals, including Saudi Arabia and Kuwait, announced production cuts of 485,000 and 131,000 barrels per day respectively for the first quarter this year.

Iran’s strategy of selling oil held at sea could have negative repercussion over the production cut agreements between 24 countries. Brent crude oil prices were trading almost 13 cents lower in Asian trade on Monday from the recent settlement, while U.S. West Texas Intermediate oil prices were trading 20 cents lower from earlier close.

The threat of rising of U.S. production is also weighing on crude oil prices, as traders are realizing that North American producers are making a stronger than expected comeback.

U.S. oil rig counts have increased since summer of the last year. Last week, Baker Hughes reported a 10th straight week of growth in U.S. oil rig counts to the highest level in the last 13 months. U.S. oil production increased mostly at a mid-single digit rate in the last six months, thanks to improving prices and declining break-even points.

U.S. producers have slashed their break-even levels to below $50 a barrel, settling strong footholds to expand volumes at current oil prices. Therefore, U.S. producers are ready to make a strong rebound in the coming days, which could stun the market participants. Several U.S. producers have announced increased spending plans for FY2017 after significant cuts in the last three years.

Crude Oil Price Falls

Crude Oil Price Falls on Shock Inventory Increase

Shutterstock photo

The U.S. Energy Department’s inventory release showed that crude stockpiles recorded an unexpected build. This weighed on oil prices , sending West Texas Intermediate (WTI) crude futures down 1.5% (or 81 cents) to $41.71 per barrel Wednesday.

On a bullish note, the report revealed that refined product inventories – gasoline and distillate – both decreased handsomely from their previous week levels.

Analysis of the EIA Data

Crude Oil: The federal government’s EIA report revealed that crude inventories increased by 2.26 million barrels for the week ending Dec 16, 2016, following a decline of 2.56 million barrels in the previous week.

The analysts and traders surveyed by The Wall Street Journal had expected crude stocks to go down some 2.3 million barrels. A jump in imports led to the surprise stockpile build with the world’s biggest oil consumer.

The latest inventory increase adds to the supply of excess oil in the U.S., though the year-over-year storage surplus has narrowed down considerably in recent months after a run of drawdowns.

At 485.45 million barrels, current crude supplies are up 7% from the year-ago period and are at upper limit of the average range for this time of year.

However, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was down 245,000 barrels from previous week’s level to 66.26 million barrels.

The crude supply cover – at 29.5 days – remained flat from previous week. In the year-ago period, the supply cover was 29.1 days.

Sector 5YR % Return

Sector 5YR % Return

Gasoline: Supplies of gasoline were down for the first time in 6 weeks on falling imports and strengthening demand. The 1.31 million barrels draw – contrary to the analysts’ polled number of 1.1 million barrels increase in supply level – took gasoline stockpiles down to 228.74 million barrels. Despite last week’s decrease, the existing stock of the most widely used petroleum product is 4% higher than the year-earlier level and is well above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 2.42 million barrels last week, dwarfing analysts’ expectations for a 900,000-barrels fall. The second successive weekly decrease in distillate fuel stocks could be attributed to higher demand and lower imports. At 153.52 million barrels, distillate supplies are 1.5% higher than the year-ago level and are sitting over the upper half of the average range for this time of the year.

Refinery Rates: Refinery utilization was 91.5% for the week.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as ExxonMobil Corp. XOM , Chevron Corp. CVX and ConocoPhillips COP , and refiners such as Tesoro Corp. TSO , Phillips 66 PSX and HollyFrontier Corp. HFC .

However, each of these firms has a Zacks Rank #3 (Hold), which does not make them screaming buys. In case you are looking for energy names for your portfolio, one could opt for Newfield Exploration Co. NFX . It has a Zacks Rank #1 (Strong Buy).

Crude Oil in USA down at $50.90

US crude settles down 14 cents at $50.90, hit by dollar strength after Fed rate hike


Stronger dollar weighs on oil

Stronger dollar weighs on oil   

Oil prices reversed earlier losses on Thursday after failing to break below technical support levels and as OPEC members told customers they would cut crude supplies as part of the cartel’s agreement to reduce output.

Earlier in the day, prices fell to the lowest level in a week as the dollar rallied following an increase in U.S. interest rates.

The dollar rose to a 14-year high against a basket of other currencies after the U.S. Federal Reserve raised rates for the first time in a year on Wednesday. A stronger dollar, in which oil is traded, tends to hit crude demand as it makes fuel purchases more expensive for users of other currencies.

International Brent crude oil futures rose 18 cents to $54.08 a barrel at 2:35 p.m. ET (1935 GMT), down 14 cents from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures settled down 14 cents at $50.90 per barrel.

Oil outlook for 2017

Oil outlook for 2017   

“Brent tested the key $53 (a barrel) support level and now we’re seeing some buying because there is too much optimism as the market waits to see how some of OPEC’s supply cuts come through in the export data,” said Troy Vincent, an oil analyst at ClipperData in Louisville, Kentucky.

The Organization of the Petroleum Exporting Countries and other producers led by Russia have promised to cut production by almost 1.8 million barrels per day (bpd) in an attempt to clear a global oversupply that has depressed prices for more than two years.

National oil companies in Saudi Arabia, Kuwait and Abu Dhabi have told customers in Asia they would cut crude supplies following OPEC’s decision to cut output. Saudi Arabia also told U.S. and European customers it would reduce oil deliveries, and traders said other OPEC members are expected to do the same.

“These delivery cut announcements provide psychological support that OPEC will follow through with their planned output cuts,” ClipperData’s Vincent said.

ANZ bank said on Thursday oil markets would move into a substantial deficit in the first quarter of 2017 if OPEC and other producers reduced output as promised.

“This will likely push oil prices well above $60 per barrel early next year,” it said.

See oil in a range of $60-$80: John Hess

See oil in a range of $60-$80: John Hess   

Oil companies have slashed costs in order to survive the low price environment, industry data show.

“2017 will be the third year investments go down, with 3 percent (declines). You need to go back to the ’80s to see three consecutive years of investment cuts,” said Audun Martinsen, vice president for Oilfield Service Research at Rystad Energy.

Crude prices also received some support from falling U.S. crude inventories.

Data from the U.S. Energy Information Administration (EIA) showed that commercial crude inventories last week declined by 2.56 million barrels to 483.19 million barrels.

However, traders said it is far from clear whether OPEC and other producers will follow through with their announced cuts.

OPEC pumped 33.87 million bpd last month, according to figures it collects from secondary sources, up 150,000 bpd from October, OPEC said in a monthly report on Wednesday.

That shows the group’s output has continued to rise, adding to a global glut, ahead of the January start of its first supply cut agreement since 2008.

That could raise questions about its ability to comply fully with the deal.

US Crude up 15 cents at $52.98

US crude ekes out another 17-month closing high, settles up 15 cents at $52.98 after producers confirm output cuts


Oil prices surge on output freeze

Oil prices surge on output freeze   

Oil traded roughly flat on Tuesday, supported by strong demand in Asia and supply cuts by Abu Dhabi, Kuwait and Qatar as part of production curbs organized by OPEC and other exporters.

However, the market faced pressure as investors closed positions to take profits on strong gains the day before.

Traders said there was significant profit-taking after oil shot to mid-2015 highs earlier this week, boosted by the deal reached by the Organization of the Petroleum Exporting Countries and other exporters to cut output by a combined 1.8 million barrels per day.

Oil's rise a major head fake: Pro

Oil’s rise a major head fake: Pro   

Analysts said oil markets were still broadly supported by the arrangement to crimp output. In addition, the International Energy Agency said on Tuesday that it had raised its forecsat for global oil consumption, which will also help reduce the overhang of supply.

In its monthly oil market report, the IEA said revisions to its estimate of Chinese and Russian consumption had prompted it to raise its forecast for global oil market demand growth this year by 120,000 barrels per day to growth of 1.4 million bpd.

However, analysts said prices will turn fast if the market believed compliance was lacking.

“The following three to six months will provide us with an answer as to whether the foundation is strong enough to hold the building or will it collapse like a house of cards,” PVM analysts wrote.

In a sign that producers are acting on their plans to cut output, Abu Dhabi National Oil Company (ADNOC) told customers it would reduce Murban and Upper Zakum crude supplies by 5 percent and Das crude exports by 3 percent.

Oil producers are pragmatic: Expert

Oil producers are pragmatic: Expert   

Kuwait’s Petroleum Corporation (KPC) did similar, notifying its customers of a cut in their contractual crude oil supplies for January.

Meanwhile, China’s November crude output fell 9 percent on a year earlier to 3.915 million bpd , data showed on Tuesday, but recovered from October’s 3.78 million bpd, which was the lowest in more than seven years.

That came as China’s refinery throughput hit a daily record in November of 11.14 million bpd, up 3.4 percent year-on-year.

“Declines in Chinese … crude oil output and expansion of its strategic crude reserves underpin our view for China’s crude oil imports to strengthen over the coming quarters,” said BMI Research.

In India, Asia’s No.2 oil consumer behind China, fuel demand rose 12.1 percent in November compared with the same month last year, hitting 16.64 million tonnes (4.07 million bpd).

US Crude Oil down at $47,96

US crude settles down 7 cents at $47.96 as doubts linger over OPEC output cut


A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices cut early losses after Iraq said it was willing to “shoulder responsibility” for some of OPEC’s planned production cuts and as U.S. government data showed crude inventories fell last week.

But gains were capped by investor doubts that OPEC will agree to a production cut large enough to make a significant dent in the global glut of crude.

OPEC’s deal faced potential setbacks from Iraq’s call for it to be exempt. Baghdad had said it needs oil revenues to fight Islamic State militants and questioned whether it should cut from the levels of OPEC’s estimates or its own, higher, production figures.

But Prime Minister Haider al-Abadi told reporters on Wednesday in Baghdad that Iraq is willing to cut its crude oil output as part of OPEC’s plan to reduce global supply and boost crude prices.

Abadi’s comments are the clearest indication so far that Baghdad will support an OPEC plan to cut production by 4 percent to 4.5 percent when it meets on Nov. 30 in Vienna.

Options activity heightens ahead of OPEC meeting: Pro

Options activity heightens ahead of OPEC meeting: Pro   

International Brent crude oil futures fell 18 cents to $48.94 a barrel by 2:35 p.m. (1935) after climbing to $49.42 a barrel earlier in Wednesday’s session on optimism OPEC would agree to an output cut.

U.S. West Texas Intermediate (WTI) crude oil futures settled down 7 cents at $47.96 a barrel after rising to $48.30 earlier on Wednesday.

U.S. crude stocks fell last week as refineries hiked output and imports fell, data from the Energy Information Administration showed on Wednesday.

Crude inventories fell by 1.3 million barrels in the last week, compared with analysts’ expectations for an increase of 671,000 barrels.

Offsetting the headline data, gasoline stocks rose by 2.3 million barrels, compared with analysts’ expectations in a Reuters poll for a 643,000-barrel gain. Distillate stockpiles, which include diesel and heating oil, were up by 327,000 barrels, versus expectations for a 357,000-barrel drop.

Crude oil inventories down 1.26M barrels

Crude oil inventories down 1.26M barrels   

Also on Wednesday, Baker Hughes reported the number of oil rigs operating in U.S. fields rose by 3 to a total of 474 in the latest week. At this time last year, the rig count stood at 555.

Futures had edged lower on Wednesday on investors’ doubts that OPEC would agree to a large enough output cut to significantly reduce the global surplus when it meets next week.

A strong dollar, trading near the 13½-year peak hit last week, also weighed on prices amid thin trading ahead of the U.S. Thanksgiving holiday on Thursday.

Exxon Mobil‘s giant oil refinery in Baton Rouge, Louisiana, was operating at planned rates on Wednesday after a fire Tuesday, according to a person familiar with the plant’s operations. The refinery is the fourth-largest in the United States, with capacity to refine 502,500 barrels per day in crude oil.

One oil cut is not enough: Expert

One oil cut is not enough: Expert   

Many traders anticipate some agreement at OPEC but fear the aim, proposed by Algeria, of cutting production by 4 to 4.5 percent, or over 1.2 million barrels per day according to Reuters calculations, may not be reached.

The deal’s success hinges on an agreement from Iraq and Iran, which may not give a full backing, three OPEC sources said Tuesday. Iran wants to increase supply because its output has been hit by sanctions.

In September, OPEC agreed to bring total output down to the level of 32.5 million to 33 million barrels a day.

Short-term though, analysts said that investors were currently unwilling to push crude prices to $50 a barrel or higher.

— CNBC’s Tom DiChristopher contributed to this report.

US crude settles down 1.1% at $49.96, pressured by OPEC squabbling


An oil tanker is seen off the port of Bandar Abbas, southern Iran.

Atta Kenare | AFP | Getty Images
An oil tanker is seen off the port of Bandar Abbas, southern Iran.

Oil prices fell 1 percent on Tuesday, with U.S. crude breaking below $50 per barrel for a second straight day ahead of weekly data that could show a build in domestic inventories.

Analysts said verbal jockeying among the Organization of the Petroleum Exporting Countries (OPEC) created uncertainty about potential output cuts at its meeting next month, noting that a particular worry was Iraq’s exclusion from the plan.

International Brent crude oil futures fell 89 cents, or 1.7 percent, to $50.57 per barrel by 2:40 p.m. ET (1840 GMT).

U.S. West Texas Intermediate (WTI) crude futures settled down 56 cents, or 1.1 percent, to $49.96 a barrel.

Nobody agrees with Iraw;s numbers

Nobody in market agrees with Iraq’s oil numbers: Analyst   

Trade group American Petroleum Institute will issue at 4:30 4:30 p.m. EDT (2030 GMT) a weekly report of crude stockpiles and other oil supply-demand data, ahead of an official report by the U.S. government’s Energy Information Administration on Wednesday.

Analysts polled by Reuters expected the data would show crude stocks rose 800,000 barrels last week, after a drop of more than 5 million barrels in the week to Oct. 14. Commodity-watchers said a leak in a pipeline leading out of the huge Cushing, Oklahoma, storage hub should lead to more build up of stocks in the coming weeks.

“The sentiment is it’s a bit more negative,” said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina. “There are some expectations that we can see a crude build.”

Official inventory data has surprised by showing drawdowns in six of the seven past weeks, including the largest fall in stocks since 1999 when analysts foresaw a build. U.S. crude stocks are closely watched to gauge supply and demand in the world’s biggest crude consumer.

The dollar rose to its highest level in nearly nine months against a basket of currencies, making greenback-denominated commodities, including crude, less affordable to holders of the euro and other currencies. The S&P 50 index for U.S. equity prices, a proxy for business confidence, fell 0.4 percent, the most in a week.

“The dollar moving higher historically is obviously a negative factor,” said Kyle Cooper, analyst at ION Energy in Houston.

Before this week, oil prices had risen nearly 13 percent in three previous weeks since OPEC announced its first planned output cut in eight years to shore up crude prices that have more than halved from 2014 highs above $100 a barrel.

OPEC mulls Iraq exemption

OPEC mulls Iraq exemption   

OPEC hopes to remove about 700,000 bpd from an estimated global supply of 1 to 1.5 million bpd. Details of how much each member should cut have been left to the cartel’s meeting in Vienna on Nov. 30.

Iraq emerging as a possible dissenter and non-member Russia as a potentially compliant collaborator ahead of the gathering of OPEC’s 14 member states,

Iraq, the second-largest producer in OPEC, said on Sunday it wanted to be exempt from output curbs as it needed more money to fight Islamic State militants.

Until there is more clarity on the planned cuts, which OPEC hopes will be coordinated with non-members such as Russia, analysts said oil prices would likely remain range-bound but volatile around current levels.

“Expect more of this choppy interplay until more concrete news emerges, as speculative buying runs into record producer selling of the futures contracts for hedging,” Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore, said.