On Tuesday, oil dipped near $62 a barrel as investors took profits in the wake of OPEC agreement to extend output cuts, though the decrease in U.S. crude inventories gave some support. Crude also dropped with worries that the OPEC to extend the supply-cutting deal through 2018 could encourage U.S. output, which rose almost 9.5 million barrels per day (bpd) during September.
Brent crude, the global benchmark, decreased 14 cents to $62.31 a barrel by 1218 GMT, losing for a second session. U.S. crude dropped 28 cents to $57.19.
“Oil prices are continuing to crumble,” said Carsten Fritsch, analyst. “We attribute the price slide to profit taking by speculative investors, who were holding almost record-high net long positions ahead of OPEC’s meeting.”
Last week, the Organization of the Petroleum Exporting Countries, Russia as well as other key non-OPEC producers extended the deal to cut output by 1.8 million bpd until the end of next year. The goal is to lessen excess oil in storage. Progress has been made as the most recent U.S. inventory reports are probable to report a drop in crude stocks for the third week in a row.
Analysts predict the reports from industry group American Petroleum Institute (API) and the government’s Energy Information Administration (EIA) to reveal crude stocks dropped by 3.5 million barrels. The API report will be published at 2130 GMT on Tuesday and the government supply report on Wednesday.
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
The increased U.S. oil production presents a problem for the OPEC’s efforts and data from last week revealed that U.S. crude output increased to almost 9.5 million bpd in September.
“U.S. output will play the most significant role on the supply front in 2018,” said Tamas Varga of oil broker. “A jump above $60 in WTI could easily push U.S. production over the 10 million bpd mark, increasing the non-OPEC forecast and capping further attempts to push prices higher.”