Crude Prices Lower as Summer Driving Season Nears End
August 21 2017 - 11:41AM
Dow Jones News
By Alison Sider and Christopher Alessi
Oil prices edged lower Monday morning, pulled lower by falling
prices for gasoline and diesel as the end of summer driving season
approaches.
U.S. crude futures recently traded down 42 cents, or 0.87%, at
$48.09 a barrel on the New York Mercantile Exchange. Brent, the
global benchmark, fell 74 cents, or 1.4% to $51.98 a barrel on ICE
Futures Europe.
Concerns that summer driving season is waning with still high
levels of gasoline and diesel in storage have taken hold, pulling
prices lower, analysts said.
"We have more than adequate inventory and the Labor Day holiday
is nearly upon us," said Andy Lipow, president of Lipow Oil
Associates. "The market is definitely under pressure from the
gasoline and diesel side."
Gasoline futures recently fell 4 cents, or 2.46%, to $1.5840 a
gallon. Diesel futures fell 3.6 cents, or 2.22%, to $1.5844 a
gallon.
The move lower reverses some of Friday's gains. Oil prices rose
sharply Friday as refinery issues propelled gasoline and diesel
futures higher, taking crude along with them.
"Those concerns are subsiding this morning, with refined
products leading a selloff that threatens to put the complex right
back into the sideways trading range that's held the action for
most of the month," analysts at TAC Energy wrote in a client note
Monday.
Those worries outweighed figures showing that production by the
Organization of the Petroleum Exporting Countries is falling.
OPEC's production is forecast to fall 419,000 barrels a day this
month, to 32.8 million barrels a day, according to Petro-Logistics
-- halting the increase seen in the previous month when compliance
with the group's production cut agreement fell to its lowest level
of the year.
The cartel's exports fell by 750,000 barrels a day in the first
half of August, Petro-Logistics said.
OPEC and 10 producers outside the cartel, including Russia,
first agreed late last year to cap production at around 1.8 million
barrels a day lower than peak October 2016 levels, with the goal of
reducing the global oil glut and boosting prices. The deal was
extended in May until March 2018.
OPEC is set to hold a technical meeting in Vienna on Monday to
discuss compliance levels with the cartel's production cut
deal.
Investors Monday were also looking ahead to see whether weekly
U.S. data on Wednesday would confirm a further drawdown in U.S.
crude stocks, according to Giovanni Staunovo, a commodities analyst
at UBS Wealth Management.
"There is the risk that inventories start to increase again" if
the recent decline in stocks was primarily fueled by seasonal
factors like increased car usage, Mr. Staunovo said.
The U.S. Energy Information Administration said last week that
crude inventories had been reduced by 9 million barrels in the week
ended Aug. 11, bringing the total drawdown since March to 69
million barrels.
At the same time, oil-field services firm Baker Hughes Inc. said
Friday that the number of rigs drilling for oil in the U.S. fell by
five in the previous week, a further sign that drillers are
responding to the lower price environment by pulling back.
--Benoit Faucon and Sarah McFarlane contributed to this
article.
Write to Alison Sider at alison.sider@wsj.com and Christopher
Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
August 21, 2017 11:26 ET (15:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.