Crude futures slide to one-month low
Oil fell Tuesday to a three-week low amid speculation that U.S. crude supply is rising while the market weighs compliance by OPEC and other exporters with promised output curbs.
Prices dropped 2.2 percent. Analysts surveyed by Bloomberg projected that an Energy Information Administration report on Wednesday will show that crude supplies rose by 1.5 million barrels last week. Futures climbed earlier as Russia, Iraq, Kazakhstan and Azerbaijan said they’re implementing output curbs in accordance with last year’s accord, echoing a statement by Kuwait on Monday that Persian Gulf producers are making their required curbs.
Oil last year capped its biggest annual gain since 2009 as the Organization of the Petroleum Exporting Countries and 11 other nations agreed to curb output starting Jan. 1 in an effort to trim a global inventory glut.
The price increase is also luring non-OPEC producers back into the market. U.S. crude production is projected to rise this year as drillers return to shale fields, according to an Energy Information Administration report Tuesday.
“From now through March we should see crude inventories climb,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “This is a show-me market. We want to see the OPEC cuts. The major reason OPEC was so intent on getting an agreement were fears that prices would collapse in the first and second quarters and revisit last year’s lows.”
West Texas Intermediate for February delivery slipped $1.14 to $50.82 a barrel on the New York Mercantile Exchange.
“We’re in wait-and-see mode,” said Mike Wittner, head of oil market research at Societe Generale in New York. “I think the market has a soft floor at $50 as long as OPEC appears to be progressing. The Saudis and other core countries have said they’re implementing the cuts, while we have mixed signals from Iraq.”
Iraq has reduced its oil production by 160,000 barrels a day and will comply with its pledge to cut output to 210,000 by month’s end, Oil Minister Jabbar Al-Luaibi said, even as ship-loading data suggested that exports are set to increase next month.
On Wall Street, the Nasdaq composite index notched its fourth recordhigh close in a row Tuesday, eking out a modest gain on a day when the other major U.S. stock indexes barely budged.