Oct. 31 (UPI) — Quarterly sentiment about higher production moving forward and warnings about the economic impact of OPEC cuts sent oil prices slightly lower early Tuesday.
Traders have been watching the balance between supply and demand closely given the effort by the Organization of Petroleum Exporting Countries to drain the surplus through coordinated production cuts. A survey of analysts from commodity pricing group S&P Global Platts showed an expected drain on U.S. commercial crude oil inventories of 1.4 million barrels and a fall of 1.7 million barrels for gasoline.
A report from the U.S. Energy Information Administration last week said crude oil production, meanwhile, could move higher along with crude oil prices. Brokers, for their part, said the market may be reaching a point of stimulus, a sentiment backed Tuesday by British energy company BP.
“Looking ahead, we expect fourth-quarter reported production to be higher than the third quarter reflecting the continued ramp-up of major projects and recovery from seasonal turnaround and maintenance activities,” the company said in its quarterly report.
The price for Brent crude oil was down 0.36 percent minutes before the opening bell at $60.37 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.24 percent to $54.03 per barrel.
OPEC ministers for much of the latter half of October have suggested the production agreement that helped drive oil prices higher could be extended further into 2018. The International Monetary Fund suggested, however, that the cuts were hurting some major oil exporters in the Middle East.
“Overall growth in oil exporters is expected to bottom out at 1.7 percent in 2017, driven by lower oil output under the OPEC-led agreement,” the report read. “In contrast, non-oil growth is expected to recover to about 2.6 percent in 2017 as the pace of budget deficit reduction slows.”
For oil exporters in the region, the IMF said budget deficits jumped from 1.1 percent of gross domestic product to 10.6 percent of GDP last year. That deficit may shrink this year, but the IMF said oil exporters will still need to be disciplined.
The forecast from Platts will be tested late Tuesday when the American Petroleum Institute releases its figures. Official data from the EIA is published midway through the morning session Wednesday.