NEW YORK (DTN) -- New York Mercantile Exchange oil futures reversed higher Tuesday morning after shaking off overnight weakness, rising as the dollar weakened while the market expects U.S. oil production to continue falling.
Also supporting oil futures are comments from the Organization of Petroleum Exporting Countries. Abdalla Salem el-Badri, OPEC secretary-general, said in London Tuesday that oil prices would rebound as steep cuts in oil investments crimp supply.
El-Badri said OPEC expects global investments in oil and gas projects to be reduced by 22.4% this year. Those remarks come as some OPEC members struggle to maintain market share. Saudi Arabia, Iran and Iraq have cut official oil prices for next month's shipments that raised concerns OPEC is adding more supply into a market with weakening demand.
Fatih Birol, head of the International Energy Agency, said he expects that expenditures will fall by 20% in 2015, the largest drop in history, the Wall Street Journal reported.
At 8:10 a.m. CDT, NYMEX November WTI crude futures were up 28 cents at $46.54 barrel while ICE November Brent crude futures rose 56 cents to $49.81 bbl. NYMEX November ULSD futures advanced 1.14 cents to $1.5597 gallon while NYMEX November RBOB futures surged 0.87 cents to $1.3940 gallon.
On Wall Street, the stock market was mixed, with Dow Jones Industrial Average reversing higher while S&P 500 was down.
On supply, an early survey by Schneider Electric showed the market expecting an average crude stock build of 1.5 million bbl for the week ended Oct. 2, with gasoline stocks up 500,000 bbl and distillate stocks down 1.0 million bbl.
Crude stocks at the Cushing, Oklahoma, supply hub that serves as the delivery point for NYMEX West Texas Intermediate is expected to decline by 500,000 bbl.
The American Petroleum Institute will release its weekly oil data at 3:30 p.m. CDT Tuesday while the Energy Information Administration’s weekly data is due out Wednesday morning.
The EIA’s monthly Short-term Energy Outlook report due out shortly is also expected to show that U.S. crude production continues to decline.
Rigs actively drilling for oil have declined for five straight weeks amid a worsening economic environment for shale producers in the United States, suggesting falling domestic crude oil output.
The slowing global economy could also limit demand growth and possibly further pressure oil futures prices.
George Orwel can be reached at email@example.com
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