SINGAPORE
(Reuters) - Oil markets dipped on Thursday, weighed down by rising crude
inventories and production in the United States as well as a stronger dollar,
which potentially hampers fuel consumption in countries that use other currencies
at home.
Brent crude
futures LCOc1, the international benchmark for oil prices, were at $56.18 a
barrel, as of 0531 GMT, down 11 cents, or 0.2 percent, from their last close.
U.S. West
Texas Intermediate (WTI) crude futures CLc1 were at $50.64 per barrel, down 5
cents.
Traders said
a strengthening dollar .DXY weighed on Brent, while rising crude stocks and
production in the United States pulled down WTI.
U.S.
commercial crude oil inventories C-STK-T-EIA rose for a third straight week,
building by 4.6 million barrels in the week ending Sept. 15 to 472.83 million
barrels.
Meanwhile,
U.S. oil production has largely recovered from the shutdowns following
Hurricane Harvey, currently standing at 9.51 million barrels per day (bpd), up
from 8.78 million bpd directly after the storm hit the U.S. Gulf Coast.
C-OUT-T-EIA
However, WTI
did receive some support from a strong draw in gasoline stocks by 2.1 million
barrels to 216.19 million barrels, traders said. aUSEIAGS
Markets
could tighten should the Organization of the Petroleum Exporting Countries
(OPEC) extend a production cut aimed at tightening supplies and propping up
prices.
OPEC will
meet in Vienna on Friday and discuss extending its deal to cut production with
some non-OPEC producers that has been in place since January. The current deal
will expire at the end of March 2018.
Under the
deal, OPEC members and some non-OPEC countries pledged to cut production by 1.8
million bpd to tighten the market and prop up prices.
But, because
OPEC members Libya and Nigeria were exempted from cutting and non-compliance by
others, markets remain amply supplied, triggering calls for more action.
“Exempt
members Libya and Nigeria may be bought into the fold... There also remains the
possibility that an extension of the agreement or an increase in the cuts may
be announced,” said Jeffrey Halley, of futures brokerage OANDA.
There are
indicators that the supply cuts are having the desired effect.
Front-month
Brent futures prices have risen by more than a quarter since June. Also, over
the past two months the structure of the Brent forward curve <0> has
moved into backwardation, when prices for immediate delivery are higher than
prices for later delivery, from contango.
The shift is
seen as an indicator of a tightening market as it incentivises the immediate
sale of oil rather than holding it in storage.
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