NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Tuesday afternoon on profit-taking after Russia gave mixed messages about its oil production policy and the International Energy Agency cut its global demand forecast while raising its supply outlook.
"The IEA report was negative on demand but I think most of the weakness for oil futures was due to profit-taking since the market was extremely overbought," said analyst Phil Flynn at Price Futures in Chicago.
IEA's Oil Market Report for October projects global demand rising by 1.2 million barrels per day (bpd) this year, revised down from estimates of 1.3 million bpd last month.
The report said global oil supply rose by 600,000 bpd in September and supply from the Organization of Petroleum Exporting Countries was at an all-time high in September. Crude output by OPEC rose 160,000 bpd to a record 33.64 million bpd in September, as Iraq pumped at the highest ever and Libya reopened ports, the report added.
NYMEX November West Texas Intermediate crude oil futures settled 56 cents lower at $50.79 per barrel (bbl). IntercontinentalExchange December Brent futures settled down 73 cents at $52.41 bbl.
In products trade, the NYMEX November ULSD futures contract declined 2.29 cents to $1.5873 gallon at settlement and the November RBOB futures contract settled 1.43 cents lower at $1.4829 gallon.
Igor Sechin, the head of Russian state-owned oil company Rosneft said today his company will not cut or freeze oil production as part of a possible agreement between Russia and OPEC. The comment came a day after Russian President Vladimir Putin said Russia would join OPEC's efforts to rein in crude production.
OPEC agreed on Sept. 28 to cut output from August levels, but postponed implementation until late November. OPEC is now working to convince Non-OPEC producers to cut production as well.
Putin provided no details about his plan on Monday but said Russia will either freeze or even cut its output. Russian Energy Minister Alexander Novak today said Russia could maintain oil production at current levels at the very least. Russia produced 10.88 million bpd in August and 2016 output is seen averaging 10.99 million bpd, according to OPEC's Oil Market Report issued last month.
OPEC Secretary General Mohammed Barkindo said any deal to freeze oil output was likely to be reviewed after six months, but the flurry of mixed messages raised doubts about implementation of the deal, analysts said.
Domestically, a survey of analysts shows the market expects U.S. crude oil inventories for the week-ended Oct. 7 to have increased by 500,000 bbl while gasoline and distillate fuel supplies are each seen down 1.8 million bbl.
The American Petroleum Institute will issue its weekly oil supply data Wednesday afternoon and the Energy Information Administration's weekly oil data is due on Thursday morning. EIA recently said starting with this report, it will no longer include crude oil stored in tanks on lease lands in the total commercial crude oil inventory data series. The change will reduce total crude stocks by roughly 31 million bbl.
George Orwel can be reached at email@example.com
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