Oil prices swung modestly lower Tuesday, shaking off earlier gains, as traders awaited a weekly report that’s expected to reveal a second-straight rise in U.S. crude stockpiles.
Weakness in the U.S. dollar had provided some support for dollar-denominated oil prices earlier in the session, but oil appeared to more closely track moves in the stock market, which saw benchmark indexes also turn lower.
April West Texas Intermediate crude CLJ8, -0.53% lost 11 cents, or 0.2%, to $62.46 a barrel on the New York Mercantile Exchange, after posting gains in the previous two sessions. May Brent crude LCOK8, +1.57% the global oil benchmark, fell 5 cents, or less than 0.1%, to $65.49 a barrel on London’s ICE Futures exchange.
Data from the Energy Information Administration due out Wednesday is expected to reveal a rise of 2.5 million barrels in crude stocks for the week ended March 2, according to analysts polled by S&P Global Platts. They also forecast declines of 500,000 barrels for gasoline and 1.6 million barrels for distillate, which include heating oil.
April natural gas NGJ18, +0.89% added 1.3% to $2.74 per million British thermal units.
Meanwhile, world stocks have been particularly volatile since a rout in early February, with oil broadly tracking their moves.
“Oil and equities were trading very much hand in hand and basically equity markets were calling the shots in terms of direction and trading patterns,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Schieldrop said he expects in the short term this trend will continue and that the selloff in equities isn’t yet over.
U.S. stocks moved mostly lower Tuesday as investors weighed concerns surrounding a possible global trade war and easing tensions between North and South Korea.
On a fundamental basis, the oil market continued to be caught between rising U.S. output and efforts to cut output by the Organization of the Petroleum Exporting Countries and other major producers including Russia.
OPEC oil production fell by 70,000 barrels a day to 32.39 million barrels in February from a month earlier, according to an S&P Global Platts report released Tuesday. The decline was driven, in part, by a “continued collapse in Venezuela’s oil industry to a historic nadir.”
At the U.S. CERA Week conference in Houston, OPEC Secretary General Mohammad Barkindo said on Monday that the cooperation which led to an agreement between OPEC and other producers to cut oil production “is as solid as the Rock of Gibraltar.”
While Barkindo said it was too early to comment on whether the deal to cut output would be extended beyond the end of 2018, Nigerian oil minister Emmanuel Ibe Kachikwu said the agreement was likely to be renewed.
“U.S. oil production is booming, the rig count is increasing, but on the other side of that it’s very clear that OPEC and the 10 cooperating countries are really delivering on their cuts,” Schieldrop said.
The International Energy Agency said Monday that the U.S. will overtake Russia to become the world’s largest oil producer by 2023. It also said it sees little sign that oil demand will peak in the next five years.