02 December 2015 – US crude steadied Tuesday as some traders expected a stockpile drop while Brent crude futures settled lower on bets Opec will not cut output to stem a supply glut when the world’s biggest oil producers meet later this week.
Expectations are high that Friday’s meeting of Opec in Vienna will choose to continue pumping crude at record levels to defend market share against non-member oil producers such as the United States and Russia, according to Reuters.
The US Labor Department’s closely watched jobs data for November was also due on Friday. Stronger employment numbers could help the Federal Reserve decide on the first US rate hike in nearly a decade, sending the dollar higher. That, and the likelihood of no Opec cuts, could drive Brent below the $40-a-barrel mark, traders said.
“We see renewed selling after the Opec meeting is defined since we expect oil balances to tilt further in a bearish direction amidst additional strengthening in the US dollar,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Brent settled down 17 cents, or 0.4%, at $44.44 a barrel.
US crude’s West Texas Intermediate (WTI) futures finished the session up 20 cents at $41.85.
While WTI was also under pressure from the global oversupply in oil, it could see some reprieve if US government data on Wednesday shows an inventory decline.
A Reuters poll of analysts forecast on Tuesday that US crude stockpiles possibly fell 500,000 barrels last week after nine consecutive weeks of builds.
But industry group the American Petroleum Institute reported a 1.6 million-barrel crude build, pressuring WTI into the negative in post-settlement trade.
Official inventory data from the US Energy Information Administration is due on Wednesday.
Both Brent and WTI saw support earlier on Tuesday as US gasoline rose as much as 6%, reacting to higher requirements for refiners to meet US renewable fuel standards.
The rally came after the Environmental Protection Agency on Monday raised previous targets for the amount of biofuels to be mixed into motor fuel for the three years to 2016.
A weaker dollar also limited the downside in oil. The dollar posted its biggest daily loss in nearly two weeks against a basket of currencies, making commodities denominated in the greenback, including oil, more affordable for holders of the euro and other currencies.