Oil Futures Settle Lower
NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled lower Tuesday afternoon on concerns the Organization of Petroleum Exporting Countries may not ratify oil production cuts they agreed to back in September.
Expectations for an increase in weekly U.S. crude inventories added to the selling pressure for oil futures.
NYMEX December WTI crude oil futures settled 56cts lower at $49.96 bbl. December Brent futures on the IntercontinentalExchange were down 67cts at $50.79 bbl at settlement.
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In products trade, NYMEX November ULSD futures settled 1.67cts lower at $1.5631 gallon while November RBOB futures eased 0.33cts to $1.5005 gallon at settlement.
The market skepticism that drove down WTI crude futures below the $50 bbl psychological level was triggered by Iraq's refusal to accept the quota limits being mandated by Organization of Petroleum Exporting Countries.
Iraq said over the weekend that it will opt out of the supply agreement reached in Algiers on Sept. 28 to cut output because of how production quotas are being allocated to individual members.
That deal, which would limit total OPEC production to a 32.5 to 33.0 million bpd range, is supposed to be ratified at the scheduled Nov. 30 biannual summit of the cartel in Vienna.
As the second biggest OPEC producer after Saudi Arabia, a final deal is unlikely without Iraq, analysts said. Today, senior OPEC officials went to Baghdad to renegotiate with Kuwaiti representatives.
On the domestic front, the market awaits the release of weekly U.S. data that's expected to show a 1.0 million bbl stock build for domestic crude oil and stock draws for gasoline and distillates of 1.5 million bbl and 2.2 million bbl, respectively.
The American Petroleum Institute is scheduled to release its data for the week-ended Oct. 21 at 4:30 p.m. EDT, and the U.S. Energy Information Administration at 10:30 a.m. EDT Wednesday.
Jeff Currie, an oil analyst at Goldman Sachs, sees U.S. crude oil production rising, especially in the Permian basin.
George Orwel can be reached at george.orwel@dtn.com
(CZ)
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