Oil fell on Wednesday, hit by improved prospects for USA output and a glut in refined products, while analysts largely expected no impact on supplies from talk of a potential producer meeting to discuss propping up prices.
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The Dow Jones industrial average was up 17.12 points, or 0.09 per cent, at 18,546.41, the S&P 500 was up 1.39 points, or 0.06 per cent, at 2,182.28 and the Nasdaq composite was up 3.01 points, or 0.06 per cent, at 5,216.15.
Market intelligence firm Genscape said that crude oil stocks at the Cushing, Oklahoma delivery hub expanded by over 307,000 barrels in the week to August 5.
“News that OPEC would be having a September meeting with certain members keen to push for supply cuts again served as the impetus for oil prices to rally”, said Angus Nicholson, a strategist at IG Markets Ltd.in Melbourne.
West Texas Intermediate crude is up 64 per cent since touching a 12-year low in February, encouraging a resumption of drilling in the shale patch.
Members of OPEC have no specific plans to renew the failed April agreement with non-members to freeze oil production, two delegates from the group said Friday, asking not to be identified because the information isn’t public.
Elsewhere, crude oil for September delivery on the New York Mercantile Exchange declined 29 cents, or 0.67%, to trade at $42.73 a barrel.
As a result, Opec members and other producers including Russian Federation did not manage to reach an agreement on freezing supply at a meeting held in Doha in April.
In China, July fuel exports rose over 50 percent from a year ago to a monthly record 4.57 million tons, official data showed on Monday, as easing demand growth and a surplus in refined oil products pushed refiners to increase shipments to overseas buyers.
US stock indexes edged higher in early trading Tuesday, following gains in global stock markets as slack Chinese consumer price figures stoked expectations of more stimulus.
“After a steep drop over the past year in USA oil production, a recent uptick in the number of rigs drilling for oil is expected to contribute to more steady monthly oil output starting this fall”, EIA Administrator Adam Sieminski said in a statement. “The rebalancing of the market is in progress.as demand remains strong and lower production from non-OPEC members take hold”.
These talks are expected to lead to action to reduce supplies. The latest decline corresponds to a USA economy in which overall economic growth has been sluggish while hiring has been relatively robust.
Trade group American Petroleum Institute (API) reported United States crude stockpiles rose by 2.1 million barrels during the week to August 5.
According to Reuters, Canadian stock futures pointed to a higher start for Canada’s main stock index on Tuesday as oil prices gained on expectations of a drop in US inventories.
In the near term, the market will be monitoring shifting levels of USA gasoline and crude stockpiles, which likely shrank last week by 1.6 million barrels and 1.75 million barrels, respectively, according to a survey of analysts by S&P Global Platts.
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“Crude prices have been rising, so there may be no deal at Opec”, said Kaname Gokon at brokerage Okato Shoji in Tokyo.
