Oil futures steadied from their overnight lows in
choppy trade on Tuesday, as traders moved past dim economic data
from China to pay attention to supply.
Nymex light, sweet crude futures for November delivery rose 0.02%, to $46.29, after settling at the lowest level in more than two weeks Monday.
December Brent crude on London’s ICE Futures exchange slipped 0.34%, to $48.45 a barrel.
Daniel Ang, an energy analyst at Phillip Futures said “the recovery in prices likely means bargain hunting” this morning after a slight overreaction to the weak China data this morning.
Analysts expectations that supply will keep declining in the U.S. is
providing a support to prices.
On Wednesday market players expect the U.S. Energy Information
Administration to release weekly U.S. inventory and production data.
Ang expects prices to rise before the release of data, as U.S. crude oil production has been declining since early July.
Still, a technical meeting between members of the Organization of the
Petroleum Exporting Countries and non-OPEC nations in Vienna on
Wednesday could add concerns that supply will continue to eclipse demand.
Major oil exporters in the Middle East are pumping around 2 million barrels per day (bpd) more crude oil than it is necessary at the moment, oil strategists say, filling inventories around the world.
Moreover, Iran is expected to boost oil production when international sanctions are lifted after it implements the conditions of a nuclear deal agreed with major world powers.
A senior Iranian oil official said Monday Tehran planned to increase crude production by 500,000 bpd within a week of the lifting of sanctions, selling the oil to traditional customers in Asia and Europe. In the longer term, weaker demand from China is expected to restrain price appreciation.
“The price action has been sideways, caught between global growth issues and supply,” said Stuart Ive, a client manager at brokerage OM Financial, adding that the slight rebound Tuesday morning is part of a sideways trend for oil in recent days.
