Oil Wavers on Mixed Production Signals
By Sarah McFarlane and Stephanie Yang
Oil prices swung between gains and losses Tuesday, as the market assessed signs of increasing production against the rebalancing of global supply and demand.
Light, sweet crude for November delivery was recently down 4 cents, or 0.1%, at $50.54 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 9 cents, or 0.2%, to $56.21 a barrel.
Prices rose more than 12% in the third quarter, as signs of lower global inventories and decreased production pushed crude futures into a bull market in September. Since then, the rally has stalled as investors have taken profits, skeptical that prices will continue to gain in the short term.
"Those levels were deemed as good selling points, and I think we're seeing a continuation of that today," said Tony Headrick, an analyst at CHS Hedging.
Investors are watching the Organization of the Petroleum Exporting Countries for signs of whether its members will extend their production cuts beyond the current end date of March 2018.
"What the market is always concerned about is as the price goes higher, the world produces more, and prices are capped," said Richard Fullarton, founder of London-based hedge fund Matilda Capital Management Ltd. "A smart move for OPEC would be to keep the cuts in place for longer than the people expect, to create a new base for oil prices."
There are also questions over whether OPEC members are adhering to quotas, which could be more problematic if prices rise, analysts said.
Late last week analysts surveyed by Reuters pegged OPEC's September output at 32.86 million barrels a day, up from the previous month and above its production cap, indicating a fall in compliance by its members.