Oil prices traded mixed on Tuesday, as last week’s gains bolstered the US crude, while Brent prices declined through lower Asian stocks and a stronger dollar, although markets still remained supported by the supply curb.
April contract West Texas Intermediate (WTI) crude futures added 0.4 percent to $61.81 per barrel, driven by Friday’s gains, as trading in the US temporarily halted on Monday for President’s Day.
Crude prices closed with a one-week gain on Friday, after losing over 12 percent in the first weeks of the month due to fears that growing US production will exceed demand as expected by the International Energy Agency (IEA).
Traders said that WTI prices found support on the reduced productions from Canada’s Keystone Pipeline System, which has lessened Canadian supplies in the US due to a leak that has slowed operating capacity since late 2017.
On the other hand, benchmark Brent crude futures was down by 0.7 percent to $65.19 a barrel, after marking a one-week peak of $65.90 on Monday.
Brent’s shortcomings was mainly due to the fall in Asian shares and a rising greenback potentially holding back demand given their ability to raise fuel cost for countries using other currencies domestically.
The US dollar index which measures the greenback’s strength against six other major rival currencies climbed 0.5 percent to $89.56.
The split of the two major crude benchmarks has shrunk WTI’s cut rate to Brent by less than $3 per barrel, compared to more than $7 late last year.
OPEC Efforts and Growing US Crude Inventory
Nonetheless, oil prices still remain on positive territory due to the Organization of the Petroleum Exporting Countries’ (OPEC) efforts to curb output to ease global glut.
Last week, major oil producer Saudi Arabia reaffirmed its alliance with OPEC and non-OPEC producers, including Russia, in an attempt to reduce about 2 percent in inventories worldwide.
OPEC Secretary-General Mohammad Barkindo stated that oil demand worldwide for 2018 is expected to expand by 1.6 million barrels per day (bpd) on an encouraging environment.
Non-OPEC stocks outside North America are also believed to decline this year and the next.
Analyst William O’Loughlin said OPEC and Russia had assured markets that there will be a systematic augmentation of output once the production cuts deal ends. The agreement is due to expire at the end of this year.
However, higher US production seems to be trying to restrain OPEC’s efforts. Oil rigs operating for new output added in number for the fourth consecutive week to 798 in the previous week, suggesting that US crude production may climb further.
Oil output in the country is already at 10.27 bpd, a record that put the US just behind Russia and ahead of Saudi Arabia, two of the world’s top oil producers.
The American Petroleum Institute (API) is set to state its forecast regarding the US crude supply on Wednesday.
Other commodities such as the gold edged lower on Tuesday, as the dollar’s continuous recovery puts the yellow metal under pressure.
Gold shed 0.3 percent to 1,342.07, while gold futures for the April contract fell by 0.8 percent to $1,344.60.
See what’s moving the markets here at FSMNews. Subscribe now to FSMNews and get updated with the latest on forex, commodities, stocks, technology, economy and a lot more.