Oil prices dropped on Wednesday, as investors assessed mixed messages about Libya’s oil supply and waited for weekly data on U.S. oil production.
On the New York Mercantile Exchange, West Texas Intermediate oil for October CLV7, -0.27% lost 13 cents, or 0.3%, to $47.71 a barrel. Brent crude, the global benchmark, LCOV7, -0.46% gave up 22 cents, or 0.4%, to $51.66 a barrel.
The pullback comes after an upbeat session on Tuesday, which was buoyed by expectations that weekly supply numbers would show a tightening in the U.S. oil market.
The report from the American Petroleum Institute, which came out after oil settled on Tuesday, showed crude inventories declined by 3.6 million barrels during the week ended Aug. 18, as expected, while gasoline stocks unexpectedly rose by 1.4 million barrels.
On Wednesday, the U.S. Energy Information Administration is set to release its official supply data for last week, at 10:30 a.m. Eastern Time.
“It’s going to be hard to beat the stock withdrawals from last week,” said Nitesh Shah, an economist and commodity strategist at asset manager ETF Securities.
The last batch of EIA data showed crude stocks had fallen by nearly 9 million barrels during the week ended Aug. 11, the ninth reduction in 10 weeks.
Shah said he expected drawdowns of crude stocks to slow as the busy U.S. summer driving season comes to an end. He also noted that a higher inventory level of refined products is a sign that “end demand is lacking.”
Meanwhile, confusion surrounding the status of Libya’s largest oil field, Sharara, also contributed to price uncertainty, according to analysts at Commerzbank. Sharara was shut down this past weekend after a local tribe closed a pipeline in a dispute over jobs. The market has subsequently responded to conflicting reports about whether the oil field is set to reopen.
“Yesterday’s flood of news reports makes it clear that the situation in Libya is still chaotic and that conditions in the country are still far from normal,” Commerzbank analysts wrote in a note Wednesday.
“This also makes it unlikely that Libya will be included in the OPEC cut agreement anytime soon,” the analysts noted.
Libya was exempt from the Organization of the Petroleum Exporting Countries’ agreement to curb crude output because its oil industry had been damaged by civil strife. But an expected surge in production in the North African country this summer has raised the question of whether the cartel should press Libya to cap production going forward.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap production at around 1.8 million barrels a day lower than peak Oct. 16 levels, with the aim of reining in the global oil glut and sending prices higher. But the deal, which was extended in May through March 2018, has failed to have a significant impact on prices.
Kuwait’s oil minister Essam al-Marzouq said on Kuwait TV Monday that OPEC will discuss whether to end or extend the production-cap deal at a meeting in November, according to media reports.
Among refined products, gasoline for September RBU7, -0.30% dropped 0.3% to $1.59 a gallon, while gasoil for the same month changed hands at $470.50 a metric ton, down 0.7% from the previous settlement.
September natural gas NGU17, -1.02% slipped 0.2% to $2.93 per million British thermal units.