Oil futures fell on Tuesday, with prices set to give back part of the sharp run-up from the previous session, ahead of the latest U.S. data on crude supplies.
Prices had climbed on Monday, with that rally partly fueled by reports that Yemen’s Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia’s largest oil fields.
“Crude’s trading path over the next 48 hours should be heavily influenced by U.S. inventories once again, especially given the turn towards crude storage builds in recent weeks,” said Robbie Fraser, senior commodity analyst at Schneider Electric. The U.S. government has reported crude supply increases in each of the last two weeks.
“Consensus market estimates have called for a slight draw” from American Petroleum Institute numbers due out late Tuesday, followed by Wednesday’s “more definitive” Energy Information Administration report, said Fraser. “However, as WTI’s discount to Brent narrows, U.S. exports could be challenged, leaving more supply to be absorbed by a U.S. refining sector that is nearing the end of the peak demand season.”
West Texas Intermediate crude for September delivery CLU19, -0.07% lost 76 cents, or 1.4%, to $55.35 a barrel on the New York Mercantile Exchange. The front-month contract, which expires at the end of the day’s regular trading session, gained 2.4% on Monday. Most-active October Brent CLV19, -0.41%which will become the front-month contract, was down 80 cents, or 1.4%, at $55.34.
Analysts polled by S&P Global Platts expect the EIA on Wednesday to report a fall of 3.1 million barrels in U.S. crude stockpiles for the week ended August 16, along with supply declines of 1.6 million for gasoline and 200,000 barrels for distillates, which include heating oil.
“Refinery utilization is expected to tick 0.2 percentage points higher to 95% of capacity, analysts said, contributing to the nationwide crude draw,” according to the S&P Global Platts survey. “While refinery runs unexpectedly stumbled in early August, they are likely to continue to climb for the rest of the month as turnaround [refinery maintenance] work approaches a seasonal low.”
Oil prices have mostly risen over the past two weeks as expectations that central banks across the globe will combat signs of recession with greater monetary stimulus that could encourage appetite for crude and other energy assets.
“Global oil demand forecasts are likely to see upgrades as central banks and governments become more aggressive in delivering stimulus,” wrote Edward Moya, senior market analyst at Oanda, in a daily research note.
“With expectations for this week’s inventory data to post a small draw, we could see oil remain focused on geopolitical tensions in the Middle East and updates on Germany’s stimulus plan and further cues from the Fed,” he wrote.
In the previous session, crude markets jumped higher after the Houthis on Saturday said they targeted the Shaybah oil field, which is owned by Saudi Arabian Oil Co., or Aramco, and holds about 14 billion barrels of oil, according to The Wall Street Journal. Aramco said a fire was extinguished at a natural-gas processing plant and that there were no injuries and no disruptions to production at the field, which produces around 1 million barrels of oil a day.
Natural-gas futures traded lower in Tuesday dealings, with the September futures contract NGU19, +0.27% at $2.193 per million British thermal units, down 1.7 cents, or 0.8%.