NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures moved lower at the open Tuesday morning on doubts the Organization of Petroleum Exporting Countries has a workable plan to stop members who are cheating on their production quotas.
OPEC and 10 non-OPEC producers, including Russia, agreed last fall to cut their production by a combined 1.8 million bpd from October 2016 levels, but the recovery in production by Libya and Nigeria limited the impact of those supply cuts.
Moreover, rising U.S. crude production and poor compliance by some the OPEC members undercut the OPEC effort. Three recent surveys showed OPEC production rose in July to a 2017 high of 33 million bpd.
Today, a group of OPEC members and nonmembers including Saudi Arabia and Russia is meeting in Abu Dhabi to discuss why compliance with the agreement has slackened and what can be done to improve it. However, the market doubts OPEC will ever come up with a strong message or plan to enforce compliance. They've not announced their decision and so far there've been no leaks on their discussions.
Meantime, a new survey by DTN shows the market expects weekly data due out this afternoon from the American Petroleum Institute and tomorrow morning from the Energy Information Administration would show stock draws of 2.8 million bbl for crude oil, 1.7 million bbl for gasoline and 800,000 bbl for middle distillates.
EIA said last week U.S. crude inventories dropped to a 481.9 million bbl seven-month low in the week-ended July 28 while production rose to a 9.43 million bpd two-year high.
At noon today, EIA will issue its August Short Term Energy Outlook on global supply and demand, while OPEC's Monthly Oil Market Report is due Thursday. The International Energy Agency's Oil Market Report is set for release on Friday.
In early trade, September West Texas Intermediate crude futures were 39cts lower at $49 bbl. October Brent on the IntercontinentalExchange eased 44cts to $51.93 bbl.
NYMEX September ULSD futures were 2.24cts lower at $1.6174 gallon, off $1.6143 a better than one-week spot low. September RBOB futures tumbled 3.06cts to $1.5993 gallon, off a near two-week low of $1.5956.
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