Oil Falls as Oversupply Concerns Persist
By Stephanie Yang and Jenny W. Hsu
Oil prices reversed gains on Monday, as investors weighed signs of strong demand against a global glut that's proven difficult to reduce.
Light, sweet crude for August delivery settled down 52 cents, or 1.1%, at $46.02 a barrel on the New York Mercantile Exchange, breaking a five-day winning streak after trading as high as $46.68 earlier in the session. Brent, the global benchmark, settled down 49 cents, or 1%, at $48.42 a barrel..
While recent data has indicated increasing consumption of crude oil, market participants have grown wary of high levels of stockpiles in the wake of increasing production around the world.
U.S. production rose near a two-year high in the week ended July 7, according to data from the U.S. Energy Information Administration last week. Meanwhile, attempts by the Organization of the Petroleum Exporting Countries to limit supply have been undermined by growing output by members such as Libya and Nigeria, which are exempt from the deal to curb production.
The International Energy Agency reported Thursday that global oil supplies in June rose by 720,000 barrels a day to 97.46 million a day, on production from both OPEC and non-OPEC members.
"The supply story here just continues to weigh," said John Kilduff, founding partner at Again Capital. "It gets pushed off the main stage at times, but its still lurking and ready to hit prices again."
Earlier Monday, prices edged higher on data showing positive oil demand in China. The country said its domestic daily crude production was down 5.1% in the first half of the year compared to the previous year and imports rose 14%. The IEA also recently raised its 2017 demand forecast by 100,000 barrels a day.
"There's just a lot of pushing and pulling on the market," Mr. Kilduff said.
U.S. crude stockpiles have also fallen by more than expected in the past week, reigniting some hopes that the rebalancing of the oil market is starting to take off. Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, noted that demand for products like gasoline and diesel have helped the market as well.
"We are emphasizing a surprising improvement in U.S. product demand since late spring as a significant driver of higher...prices," Mr. Ritterbusch said in a Monday note.
Gasoline futures also reversed morning gains, closing down 0.2% to $1.5567 a gallon. Diesel futures fell 1% to $1.4995 a gallon.