Oil Prices Mixed Ahead of Inventory Forecast
21 February 2018 - 10:22PM
Dow Jones News
By Alison Sider and David Hodari
Oil prices were mixed Wednesday as the U.S. dollar rallied and
investors anticipated data expected to show another increase in
U.S. crude output.
U.S. crude futures snapped a four-session streak of gains,
settling down 11 cents, or 0.18%, to $61.68 a barrel on the New
York Mercantile Exchange. Brent, the global benchmark, gained 17
cents, or 0.26%, to $65.42 a barrel on ICE Futures Europe.
Oil prices surged at the start of the year before pulling back
along with equity markets. But prices recently have been locked in
a relatively tight band.
"From a fundamental point of view it's been kind of a nothing
sandwich -- OPEC production is still low, everyone is still worried
about U.S. production growth," said John Saucer, vice president of
research and analysis at Mobius Risk Group.
Prices are being pulled in two directions, with recent comments
from the Organization of the Petroleum Exporting Countries showing
commitment to ongoing production cuts giving support, while rising
forecasts for U.S. shale output provide pressure, said Harry
Tchilinguirian, global head of commodity market strategy at BNP
Paribas.
"Oil prices are down but they're still trading in their recent
price range," Mr. Tchilinguirian said.
Currency moves were the key driver behind the falling prices
Wednesday.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, was last up 0.43%, and it has clawed back much
of this year's losses in recent days. Analysts pointed to rising
U.S. 10-year Treasury yields as a factor behind the dollar's rally
so far this week.
"Oil prices are likely to slide for as long as the U.S. dollar
appreciates, especially since fundamental data also point more
towards falling prices," analysts at Commerzbank said in a
note.
The dollar rally added to the factors weighing on oil prices
since data last week showed record high U.S. shale oil production.
The International Energy Agency's closely watched monthly report
indicated that U.S. shale output is growing faster in 2018 than
ever before. Analysts and investors are anticipating another
increase in U.S. output when data from the U.S. Energy Information
Administration is released Thursday, raising concerns that new
production from shale will overwhelm the market again.
"We've heard guesses that production up again," said James Burr,
senior vice president, energy, at INTL FCStone Financial Inc. "I
think [prices are] just floundering right now until tomorrow's
report."
U.S. Deputy Energy Secretary Dan Brouillette's remark Tuesday
that America's oil output is on track for "phenomenal" growth this
year, may concern some investors, with "a tsunami of U.S. shale oil
[being] bearish," Mr. Tchilinguirian said.
At the same time, investors also weighed competing long-term
demand forecasts. Oil giant BP PLC said this week that it expects
demand to peak in the next two decades, while the International
Energy Agency said it doesn't expect oil demand to top out before
2040.
Gasoline futures rose 0.7 cent, or 0.4%, to $1.7573 a gallon.
Diesel futures rose 0.46 cent, or 0.24%, to $1.9323 a gallon.
On Thursday morning, the U.S. government releases its weekly
inventory report, and analysts surveyed by the Wall Street Journal
expect crude oil stockpiles to have risen by 1.9 million barrels
last week.
The American Petroleum Institute, an industry group, said late
Wednesday that its own data for the week showed a 900,000-barrel
decrease in crude supplies, a 1.5-million-barrel rise in gasoline
stocks and a 3.6-million-barrel decrease in distillate inventories,
according to a market participant.
Write to Alison Sider at alison.sider@wsj.com and David Hodari
at David.Hodari@dowjones.com
(END) Dow Jones Newswires
February 21, 2018 17:07 ET (22:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.