Oil seesaws as global glut pit against U.S. crude draw forecast

*Oil production platform.

*Oil production platform.

10 August 2016, London — Oil prices were little changed on Tuesday as the market weighed forecasts for a weekly drop in U.S. crude inventories against a stubborn global petroleum glut.

The market also lost the momentum of the previous day’s rebound when crude futures rose nearly 3 percent on talk that the Organization of the Petroleum Exporting Countries and other oil producers might initiate another round of talks on price cooperation.

Brent crude LCOc1 was down 5 cents at $45.34 a barrel by 11:36 a.m. EDT (1536 GMT), after trading between $45.77 and $44.80.

U.S. West Texas Intermediate (WTI) crude rose by 8 cents to $43.10, also trading within a dollar band between $43.52 and $42.50.

“The oil market remains in a battle between the trading community which focuses in the shorter term data and information which has been mostly bearish, versus the investment trading crowd which is focused on the medium-to-longer term which is projected to be bullish,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

“Both WTI and Brent will have to move above the $50 per barrel level and remain there for the shorter-term traders to regain confidence that the market is embarking on a new up leg,” Chirichella said.

The U.S. government is expected to report on Wednesday a 1.0 million-barrel crude stockpile drawdown for the week ended Aug. 5, after unexpected rises in two prior weeks, analysts polled by Reuters said.

The American Petroleum Institute (API), a trade group, will issue its own report on U.S. petroleum stockpiles after Tuesday’s market settlement, at 4:30 p.m. EDT (2030 GMT).

The forecast U.S. draw aside, analysts and traders have mostly cautioned of a glut building in both crude and refined oil products this summer, with U.S. gasoline demand particularly lagging supply despite the peak season for driving in the United States. OPEC’s biggest producers have also been pumping near record high levels. [OPEC/O]

Speculation of market cooperation between OPEC and other producers also fizzled after disinterest shown by top producer and non-OPEC member Russia, traders said.

“The discussions are likely to prove to be nothing but empty talk, with OPEC sticking with its policy of defending its market share,” said Eugen Weinberg, an analyst at Commerzbank.

*Alex Lawler & Osamu Tsukimori; Editing – David Evans & Marguerita Choy – Reuters

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