Oil edged up as traders anticipate another decline in US crude stockpiles, while Libya is working to reopen its largest field.
Gains in New York waned from as much as 1.4% in a choppy session.
A Libyan security force is on the way to fix a closed valve found on the pipeline linking the Sharara field to the Zawiya port. The field has shut, restarted and shut again since the weekend.
In the US, traders expect a report today will show crude inventories shrank for an eighth week. “If we are going to get into a new era of instability with Libyan oil production, if it becomes a wild card again, that’s definitely supportive for prices,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone.
In the US, “it’s widely expected that we are going to see another big draw-down in oil inventories.”
Oil in New York has floundered below $50 a barrel this month as the Organisation of Petroleum Exporting Countries (Opec) and its allies work to curb a worldwide surplus fed largely by American shale.
Even as US drillers withdraw rigs from fields, output from shale regions are forecast to reach a record next month. A committee set up to monitor Opec-led cuts saw compliance with the agreement at 94% in July, down from 98% in June.
West Texas Intermediate for September delivery, which expired yesterday, rose 30 cents to $47.67 a barrel at 12:23pm on the New York Mercantile Exchange. Total volume traded was about 12% above the 100-day average. The more-active October contract increased 26 cents to $47.79 a barrel. There’s also “a little bit of expiration madness,” Flynn said. “There’s a lot of positioning before the September expiration.”
Brent for October settlement added 23 cents to $51.89 a barrel on the London-based ICE Futures Europe exchange. Prices dropped $1.06, or 2%, to $51.66 on Monday.
The global benchmark crude traded at a premium of $4.10 to October WTI. A ministerial committee that reviews cuts by Opec and its allies is said to have a proposal to meet in September, according to delegates familiar with the matter. Another panel, composed of technical experts, plans to meet to review compliance with the agreed cuts two days earlier, the delegates said.
The market needs clarity on whether Opec will extend its production-cut agreement further into 2018 before moving substantially higher, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.
US crude stockpiles have declined for seven straight weeks as the summer driving season peaked in the world’s biggest economy, Energy Information Administration data showed. While inventories have eased, oil production remains at the highest level since July 2015.
The industry-funded American Petroleum Institute was to release its inventory data later yesterday, and the EIA will provide its weekly update today.
The Energy Department is accepting bids for 14mn barrels of sour crude oil from the US oil reserve until August 30, according to a notice of sale posted yesterday. WTI will continue to trade at a discount to Brent but its relative weakness to the global benchmark will abate in the coming months, according to BNP Paribas.
Next Opec, non-Opec ministerial meeting proposed for Sept 22
The next meeting of a ministerial committee of Opec and non-Opec states monitoring compliance with their pact to cut oil output has been proposed for September 22 in Vienna, two sources familiar with the matter said.
The proposal is awaiting approval by all the ministers, the sources said.
At their last meeting in July they agreed to meet next in September without setting a date or location.
The ministers on the panel are those from Opec members Kuwait, Algeria and Venezuela, plus non-Opec Russia and Oman.
The Saudi energy minister has also attended previous meetings because Riyadh holds the Opec presidency in 2017.
The date of the next meeting of the panel of experts known as the joint technical committee has been proposed for September 20, also in Vienna, the sources said.
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