Oil Pulls Back From Early Session Highs

NEW YORK (DTN) -- New York Mercantile Exchange oil futures have pulled back off early session highs trading mostly lower at the start of regular trade Tuesday morning amid doubts the Organization of Petroleum Exporting Countries will cut production next month. A stronger dollar index is also weighing on the oil futures complex.

Iraq has said it wants to be exempt from the OPEC accord announced in Algiers on Sept. 28 to cut production. That deal, which would limit total OPEC output to a 32.5 to 33.0 million bpd range, is expected to be ratified at the scheduled Nov. 30 biannual summit of the cartel in Vienna.

Ahead of the Vienna summit, negotiations about quota allocations for individual countries have been going on over the past two weeks. Iraq has voiced complaints about its quota allocation.

Iraq’s argument centers on the production data being used by OPEC to allocate quotas. OPEC wants to use secondary sources data, which put Iraq’s output at 4.45 million bpd in September, but Iraq wants the higher data Baghdad gave the OPEC secretariat, which shows 4.77 million bpd.

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 iron out the differences.

At last look, NYMEX December WTI crude oil futures were 30cts lower at $50.22 bbl. December Brent futures on the IntercontinentalExchange were down 36cts at $51.10 bbl.

In products trade, NYMEX November ULSD futures declined 1.08cts to $1.5690 gallon while November RBOB futures edged up 0.25cts to $1.5063 gallon.

The market also awaits the release of weekly U.S. data that’s expected to show a stock build for domestic crude oil and stock draws for oil products.

The American Petroleum Institute is scheduled to release its data for the week-ended Oct. 21 later this afternoon and the Energy Information Administration Wednesday morning.

On Monday, Genscape reported crude supplies at the Cushing, Oklahoma, NYMEX delivery hub fell by 1.0 million bbl during the week-ended Oct. 23. The survey projects a decline of 300,000 bbl for the week-ended Oct. 21.

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