Oil Steadies, Takes Cue From Stocks
By Sarah McFarlane and Alison Sider
Oil prices steadied Tuesday, supported by moves in stock markets and currencies, even as investors continued to anticipate a massive increase in U.S. crude output.
U.S. crude futures recently traded up 2 cents, or 0.03%, to $62.59 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 5 cents, or 0.08%, to $65.59 a barrel on ICE Futures Europe.
World stocks have been particularly volatile since a rout in early February, with oil broadly tracking their moves.
"Oil and equities were trading very much hand in hand and basically equity markets were calling the shots in terms of direction and trading patterns," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Mr. Schieldrop said he expects in the short term this trend will continue and that the selloff in equities isn't yet over.
Oil was also supported by a slightly weaker dollar on Tuesday. As oil is priced in dollars, it becomes more affordable for holders of other currencies when the dollar weakens.
The Wall Street Journal Dollar Index, which tracks the U.S. currency against a basket of others, was down 0.4% Tuesday.
On a fundamental basis, the oil market continued to be caught between rising U.S. output, and efforts by the Organization of the Petroleum Exporting Countries and other major producers including Russia to cut output. The International Energy Agency forecast Monday that the U.S. would become the world's top crude producer by 2023, with production reaching a record of 12.1 million barrels a day, about 2 million barrels a day higher than 2018 production.
"Despite the continued threat from U.S. shale growth, supply issues in Libya as well as a continuously fading surplus to the five-year average for U.S. crude stocks continue to offer support to the market," analysts at Schneider Electric wrote in a client note Tuesday.
Investors were monitoring news from the U.S. CERA Week conference in Houston, where OPEC Secretary-General Mohammad Barkindo said on Monday that the cooperation which led to an agreement between OPEC and other producers to cut oil production "is as solid as the Rock of Gibraltar."
While Mr. Barkindo said it was too early to comment on whether the deal to cut output would be extended beyond the end of 2018, Nigerian oil minister Emmanuel Ibe Kachikwu said the agreement was likely to be renewed.
"U.S. oil production is booming, the rig count is increasing, but on the other side of that it's very clear that OPEC and the 10 cooperating countries are really delivering on their cuts," Mr. Schieldrop said.
Gasoline futures recently fell 0.35% to $1.9282 a gallon. Diesel futures rose 0.2% to $1.9005 a gallon.
Write to Sarah McFarlane at firstname.lastname@example.org and Alison Sider at email@example.com
(END) Dow Jones Newswires
March 06, 2018 11:15 ET (16:15 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.