Oil prices pulled back Tuesday morning, despite ongoing talk of possible production curbs in Libya and Nigeria and news of shrinking U.S. stockpiles.
Brent crude, the global benchmark, fell 0.5%, to $46.63 a barrel, in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.5%, at $44.16 a barrel.
"The situation remains unstable," said Eugen Weinberg, head of commodity research at Commerzbank. Markets, he said, remain "a bit on the bearish side."
Prices fell 6% in the three sessions ending last week before beginning a tepid recovery Monday during U.S. trading, boosted by news that the Organization of the Petroleum Exporting Countries could pressure Nigeria and Libya to curb oil production.
Both are members of OPEC but exempt from the group-led agreement to cut global output by 2%. The exemption was meant to allow their production to rebound following years of fighting between the countries' governments and local insurgents, which blunted output. In recent months, production has risen strongly, offsetting some one-third of the cuts made so far this year by the cartel and its allies.
The output-cap exemptions for Libya and Nigeria have drawn ire from some fellow producers, and the issue is expected to be discussed when OPEC's monitoring panel meets on July 24 in Moscow.
Pushback from Nigeria and Libya to continue exemptions is expected to be strong, said Tim Evans, a Citi Futures analyst. But they may "be open to some form of limits if the right financial incentive can be found."
But if the two countries were willing to simply not raise output further, it is unclear if that would help reduce the continuing global oil glut.
"The rather muted price reaction thus far highlights that there is probably little conviction out there that such a cap would actually end up being lower than current production levels," analysts at JBC Energy wrote in a note Tuesday morning.
Prices had also been helped Monday when data provider Genscape said stockpiles at Cushing, Okla., shrank 2.1 million barrels from June 30 to July 7, according to a person who had reviewed the report. Cushing is the delivery point for the benchmark U.S. West Texas Intermediate oil contract and often regarded as a bellwether for supply and demand trends.
Traders and analysts were looking ahead to the monthly reports of OPEC and the International Energy Agency, to be released Wednesday and Thursday, respectively.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.70%, to $1.4002 a gallon. ICE gasoil changed hands at $429.00 a metric ton, down 1.04% from the previous settlement.topics from