Crude oil prices turn lower after a banner day Wednesday as compliance wanes for an OPEC-led effort to balance the market. File photo by Monika Graff/UPI | License Photo
Aug. 24 (UPI) -- Oil prices fell flat early Thursday as questions about OPEC's efforts to balance the market overshadowed possible U.S. offshore production issues.
Crude oil prices rallied Wednesday after the U.S. Energy Information Administration issued a report indicating further drawdowns in U.S. crude oil and gasoline inventories, a sign the market in the world's largest economy was starting to balance out.
Geoffrey Craig, the oil futures editor for pricing group S&P Global Platts, said the U.S. oil supply surplus has been cut from about 40 percent to 20 percent since early February.
"But traders already appear to be looking ahead to next month, when crude stocks typically build as refinery demand fades when units are taken offline for the fall maintenance period," he said in an emailed report.
Members of the Organization of Petroleum Exporting Countries and a handful of other producers, meanwhile, are working to erase the oversupply with production cuts of their own. A monitoring committee said Thursday that "all options" were on the table to ensure the measure works as planned.
Discipline is deteriorating, however, as reported compliance with the deal has moved lower since June. Kazakhstan, a non-member state contributor, is on pace to produce more from its flagship Kashagan oil field and an emailed report from London oil broker PVM said waning compliance is a "very real possibility."
The price for the basket that makes up Brent crude oil, the global benchmark, was down 0.42 percent at 9:18 a.m. EDT to $52.35 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.87 percent to $48 per barrel.
Questions about OPEC overshadowed the closure of some installations in the U.S. Gulf of Mexico in response to Tropical Storm Harvey, which could hit the southern coast of Texas as a hurricane by late Friday. About 20 percent of the total U.S. crude oil production is centered in the Gulf of Mexico and four installations are already shut in by the storm.
On the economic front, the U.S. Labor Department reported first-time claims for unemployment increased 2,000 from last week and the previous week's numbers were revised higher by 1,000, though the four-week moving average, a less-volatile measurement, was down 2,750 from the previous week.
Elsewhere, the broader markets are watching as the world's central bankers kick off their annual meeting in Jackson Hole, Wyo., late Thursday morning. Investors will look at any statements there for a broad assessment about the health of the overall economy.