NYMEX Oil Futures Settle Lower

NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Tuesday afternoon under pressure from renewed concerns about a supply glut, although weekly industry data this evening and Wednesday morning are expected to show stock draws for crude oil and gasoline while distillates supply is expected to have edged higher.

The American Petroleum Institute is set to issue its data for the week ended Aug. 5 at 4:30 p.m. EDT that's expected to detail the nation's commercial crude stocks were drawn down by 2.5 million bbl, gasoline supplies declined 1.5 million bbl while the inventory of distillates are seen up 300,000 bbl. The Energy Information Administration will issue its weekly data at 10:30 a.m. EDT Wednesday.

At midday, EIA issued its August Short-Term Energy Outlook that raised its estimates for global oil demand for 2016 by 16,000 bpd, projecting that consumption will grow at the rate of 1.4 million bpd to 95.308 million bpd. However, the STEO report cut estimates for 2017 global demand growth rate by 25,000 bpd from levels published last month and also forecast U.S. crude oil production down this year by 400,000 bpd instead of 500,000 bpd as projected in last month's report.

NYMEX September West Texas Intermediate crude futures settled 25cts down at $42.77 bbl, reversing off a $43.52 two-week high. The October Brent crude contract on the IntercontinentalExchange lost 41cts with a $44.98 bbl settlement, reversing off a $45.77 two-week spot high.

In products trade, NYMEX September ULSD futures eased 1.29cts to a $1.3307 gallon settlement, having fallen from a $1.3576 two-week spot high. NYMEX September RBOB futures declined 1.58cts to a $1.3462 gallon settlement, moving off a $1.3374 three-day.

On Monday, crude and ULSD futures settled higher after OPEC President Mohammad bin Saleh al-Sada said the producer group plans to hold an informal meeting on the sidelines of the International Energy Forum's conference scheduled to take place in Algeria in late September. The expectation is that members would discuss production cuts.

However, analysts today expressed skepticism of any potential deal to cut production by OPEC members, citing a meeting early this year when talk of a deal by OPEC and Russia to freeze output unraveled.

"OPEC chatter only helped the market yesterday but nobody thinks they'll freeze output," said Tom Bentz, head of energy derivatives at ABN AMRO in New York. "They couldn't agree the last time and right now only Venezuela wants an output cut. It looks like WTI is in a $39 to $44 bbl trading range and unless we get either a strong data or bad from API or EIA it will remain within that range."

"The market is indecisive and range-bound, but I think there's some pressure building on prices to go lower," said Thomas Finlon, a director at Energy Analytics in Wellington, Florida.

George Orwel can be reached at george.orwel@dtn.com