Seasonal issues that will eventually lead to a slowdown in refinery work and a build in crude oil storage leaves leads to a rough open for crude oil prices in U.S. trading. File Photo by Monika Graff/UPI |
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Aug. 15 (UPI) -- Crude oil prices moved deeper into negative territory early Tuesday as market watchers looked further out in the future to a pending slowdown in U.S. refining.
Crude oil prices suffered a dual blow Monday from steady, though at times shaky, production recovery in Libya and from a report of an expected increase in U.S. shale oil activity. The price for a barrel of oil dropped below $30 per barrel last year as gains in U.S. oil production added to supply-side concerns from members of the Organization of Petroleum Exporting Countries defending a market share with robust output.
OPEC in January adopted a measure to cap production to draw down global supplies, though Libya is exempt from the agreement because of national security concerns. U.S. oil production, meanwhile, remains resilient.
On the balance situation, a survey of analysts from S&P Global Platts revealed expectations of a 3.6 million drop in U.S. crude oil inventories and a 400,000 barrel decline for gasoline. For crude oil inventories, that leaves the surplus at 23 percent above the five-year average, down from the 34 percent reported at the end of March.
That would normally send crude oil prices higher, though Platts Oil Futures Editor Geoffrey Craig said traders are looking to the future.
"Oil futures have become lodged in a tight price range this month as traders await the autumn maintenance period that typically brings with it a seasonal drop in refinery demand and resulting build in crude stocks," he said in an emailed report.
The price for Brent crude oil was 0.75 percent lower than Monday's close to trade at $50.35 per barrel at 9:15 a.m. EDT. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.55 percent to $47.33 per barrel.
Oil prices are moving in a narrow band because OPEC's balancing act is offset in part by gains from the United States. Phil Flynn, senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter the leveling effect may be overstated because production growth isn't keeping up with demand.
"Growth pales to global demand growth that this winter could surge to record highs," he said.
The price of oil will be influenced late Tuesday afternoon when the American Petroleum Institute releases its data on oil and gasoline stockpiles. Official U.S. data is released late Wednesday morning.
