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Oil eases back Tuesday from 4-year highs with data expected to show a weekly rise in U.S. crude supplies

By Mayra P. Saefong

Petroleumworld 10 02 2018

Oil futures end a few cents lower on Tuesday, a day after reported declines in Iranian exports and a preliminary trade agreement between the U.S., Canada and Mexico contributed to a rise in global and U.S. prices to their highest levels in nearly four years.

Investors awaited weekly data, due early Wednesday, that are expected to reveal a second straight climb in U.S. crude inventories.

November West Texas Intermediate crude CLX8, -0.05% the U.S. benchmark, fell 7 cents, or less than 0.1%, to settle at $75.23 a barrel on the New York Mercantile Exchange. December Brent LCOZ8, -0.40%  fell by 18 cents, or 0.2%, to finish at $84.80 a barrel on the ICE Futures Europe exchange.

On Monday, both contracts settled at around their highest levels since the fall of 2014, according to FactSet data.

The American Petroleum Institute, a trade group, will release its weekly petroleum supply report late Tuesday, covering the week ended Sept. 28. The official government data from Energy Information Administration will come out Wednesday morning.

The figures come as refineries are conducting season maintenance, which could lead to higher oil inventories, but oil supply may also fall given that the “export window is wide open,” said Phil Flynn, senior market analyst at Price Futures Group.

Analysts polled by S&P Global Platts expect the EIA to report a weekly rise of 2.76 million for domestic crude supplies. That would the second weekly climb in a row reported by the EIA. Supplies of gasoline were forecast to fall by 672,000 barrels, while distillates were seen down 1.83 million barrels, the survey said.

Last week, the EIA report showed that domestic crude supplies rose by 1.9 million barrels for the week ended Sept. 21, marking the first climb in six weeks.

On Nymex Tuesday, November gasoline RBX8, +0.12%  fell less than a penny to $2.127 a gallon and November heating oil HOX8, +0.05%  ended little changed at $2.408 a gallon.

Natural-gas prices, meanwhile, extended their sharp rise from a day earlier, with November natural gas NGX18, -0.06%  settling at $3.166 per million British thermal units, up 2.3%. It notched another finish at its highest since January.

“Unusually low storage levels continue to signal potential volatility and upside risk for front-month contracts through winter,” said Robbie Fraser, commodity analyst at Schneider Electric.

Oil traders have attributed a recent rally in crude to declining Iranian exports, which have come ahead of oil-specific U.S. sanctions against Tehran that are set to take effect early next month.

Data from Bloomberg based on tanker-tracking reports, indicate that Iranian crude shipments dropped to 1.72 million barrels a day in September, down 260,000 barrels a day from August, and representing the lowest levels since February 2016 .

President Donald Trump in May pulled the U.S. out of a 2015 international agreement to curb Iran's nuclear program, setting the stage for the reimposition of economic sanctions in November.

Matt Smith, director of commodity research at ClipperData told MarketWatch that the dollar's strength, with the ICE U.S. Dollar Index DXY, +0.19% gaining 0.3%, was creating some resistance for oil on Tuesday.

Prices had climbed Monday as an updated North American Free Trade Agreement, now slated to be called the U.S.-Mexico-Canada Agreement, or USMCA, boosted expectations for oil demand. Global stocks, however, were slumping on mounting worries about a possible clash between Italy and the European Union, which could hurt the EU economy and oil appetite.


Story by Mayra P. Saefong from MarketWatch.
10 02 2018 19:25 GMT

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