Oil futures lost ground Tuesday, feeling pressure as ships resumed moving through the Suez Canal and traders turned their attention to a meeting of the Organization of the Petroleum Exporting Countries and its allies later this week.
Saudi Arabia is likely to urge OPEC and its allies, a group known as OPEC+, to extend existing production curbs through May at Thursday’s meeting, according to a report by Reuters.
“The fact that prices are selling off is telling us that investors think that all this may not be enough, especially in light of weaker demand in Europe and the recent softness seen in China as well,” said Edward Meir, analyst at ED&F Man Capital Markets, in a daily report.
West Texas Intermediate crude for May delivery
fell $1, or 1.6%, to $60.56 a barrel on the New York Mercantile Exchange. May Brent crude
the global benchmark, was down 89 cents, or 1.4%, at $64.09 a barrel on ICE Futures Europe.
Crude is on track for monthly declines, with WTI down 1% in the month to date and Brent off 0.4%, though both remain up more than 20% so far this year.
“Prior to the weakness in the market, expectations were that the group would start easing cuts more aggressively from May. However, the wobble we have seen in prices means that OPEC+ will likely need to take a cautious approach once again,” said Warren Patterson, head of commodities strategy at ING, in a note.
“The market is now more split around what the group will decide. We are of the view that the group will likely hold output levels unchanged, with OPEC+ wanting to avoid another selloff. However, if we do see any easing in cuts, it is likely to be very modest,” he said.
Meanwhile, shipping has resumed through the Suez Canal after the container ship Ever Given was successfully refloated Monday. The ship ran aground last week, halting traffic through the chokepoint, which accounts for around 10% of global seaborne oil trade.
Back on Nymex, prices for petroleum products moved lower along with oil. April gasoline
fell 0.9% to $1.98 a gallon and April heating oil
declined by 0.6% to $1.80 a gallon. The April contracts for both commodities expire at the end of Wednesday’s session.
On its first full day as a front-month contract, May natural gas
traded at $2.63 per million British thermal units, down 0.8%.
Energy traders also wait the latest data data on U.S. petroleum inventories from the American Petroleum Institute late Tuesday and Energy Information Administration early Wednesday.
Domestic crude supplies, as reported by the EIA, are forecast to have climbed by 600,000 barrels for the week ended March 26, and supply increases of 400,000 barrels for gasoline and 300,000 barrels for distillates are expected, according to IHS Markit,