WASHINGTON (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange moved lower Tuesday afternoon following light losses on Monday, pressured by concerns over the pace of global economic growth, while the U.S. dollar strengthened to a 1-1/2 week high in index trading.
NYMEX March West Texas Intermediate futures settled down $0.90 at $53.66 per (bbl) in an outside down session. ICE April Brent futures settled down $0.53 at $61.98 bbl, widening its discount to front-month WTI futures to an $8.32 bbl two-week high. NYMEX March ULSD futures settled down 0.99 cent at $1.8975 gallon. March RBOB futures ended 0.64 cent lower at $1.4259 gallon.
Oil futures remained under pressure from modestly bearish data released Tuesday morning detailing a slowdown U.S. service sector growth, with the Institute of Supply Management's Nonmanufacturing Index sliding from 57.6 in December to a less-than-expected 56.7 in January. Also released this morning, the U.S. Services Purchasing Managers Index slowed slightly from December's 54.4 to an as expected 54.2 in January.
Traders remain skittish over economic growth, reciting the 0.6% drop in new factory orders in the United States for November reported Monday. The release of the data was delayed by the partial government shutdown.
Still, the U.S. dollar rallied to a better-than-one-week high in index trading Tuesday afternoon, although the dollar's gain put downward pressure on oil futures.
The lower close comes ahead of weekly inventory data from the American Petroleum Institute this afternoon, and the Energy Information Administration 10:30 a.m. EST Wednesday.
The market expects a build in U.S. commercial crude supply of about 1.5 million bbl occurred during the week ended Feb. 1. Gasoline supply is seen to have increased by 1.3 million bbl during the week profiled, with distillate stocks expected to have been drawn down by 2.0 million bbl.
Wire services report that Saudi Arabia and its Persian Gulf allies proposed to formalize its partnership with a non-OPEC heavyweight Russia in an attempt to exert more control over the oil markets. According to an official with the Organization of the Petroleum Exporting Countries, the 14 member cartel and a 10-nation group led by Russia are set to debate the proposal during the week of Feb. 18 in Vienna.
The two groups have increasingly worked together to manage the volatility of oil markets in recent years, including in December when they agreed on a deal to cut 1.2 million barrels per day of production during the first six months of 2019. The latest proposal is a compromise of earlier plans floated by the Saudis and Emiratis.
Under its own proposal, Saudi Arabia advocated the creation of a completely new organization integrating Russia as a full member. In June, Crown Prince Mohammed Bin Salman, through his oil minister Khalid al-Falih, proposed a new Vienna-based cartel, according to OPEC officials.
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