USA gasoline futures tumbled 4 per cent after Colonial Pipeline Co said it expects to restart its main 1.3 million barrel per day gasoline line on Wednesday after being shut for more than a week to fix the biggest leak in almost two decades.
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Oil prices reacted to comments of Venezuela’s Oil Minister Eulogio Del Pino that global production is at 94 million barrels per day, while it is needed to reduce the volume by 9 million barrels per day to sustain the level of consumption. Analysts expect an increase of 2.3 million barrels in crude stocks. OPEC’s 14 members are pumping more than 33 million barrels a day, and inventories will grow even more if no action is taken, Bouterfa said.
Several members of OPEC have called for an output freeze to rein in an oil glut that triggered a price collapse in the last two years, hitting the revenues of major producers.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 1.93 percent, or 85 cents, at $44.90 a barrel at 0644 GMT (02:44 a.m. EDT). Takin highlighted the poor security and military clashes in Libya, which is affecting the African country’s oil exports. The October contract had expired yesterday at $43.44 a barrel and the front-month has now rolled over to November delivery.
Saudi Arabia’s oil exports climbed in July to a record level for that month, as the kingdom curbed the amount of crude it burns to generate energy domestically, according to the Joint Oil Data Initiative.
But prices have also swung from “buying on the dips” by investors anxious about OPEC production drops in the near future, Shelton said.
“Gains on Monday were wiped out in trading on Tuesday for oil, as many analysts predict a significant increase in U.S. inventories of over two million barrels, which would indicate ongoing global oversupplies”, said analyst Bill Hodder at broker Love Energy.
“We see no chance of a production freeze agreement materializing”. OPEC Secretary-General Mohammed Barkindo was optimistic about the meeting.
“The agency’s Sec Gen appears to be sending off signals that the talks will be informal and unlikely to result in a decision to restrain output”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
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Nevertheless, if an agreement is to be reached, the most likely scenario is that OPEC and non-OPEC participants agree to some sort of consensus about capping output, but a formal agreement would only come from some future meeting, not from the upcoming gathering in Algeria.
