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Oil turns higher ahead of API supply report

Commodities Aug 09, 2016 09:38AM ET
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© Reuters. Oil pushes higher ahead of API supply report
 
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Investing.com - Oil prices erased earlier losses in North American trade on Tuesday, as market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 1.0 million barrels in the week ended August 5.

Gasoline inventories are expected to decline by 1.2 million barrels while stocks of distillates, which include heating oil and diesel, are forecast to rise by 375,000 barrels, according to analysts.

Crude oil for September delivery on the New York Mercantile Exchange tacked on 28 cents, or 0.65%, to trade at $43.30 a barrel by 13:37GMT, or 9:37AM ET.

On Monday, New York-traded oil futures jumped $1.22, 2.92%, as fresh hopes for an agreement among exporters to freeze production underpinned the market.

Despite recent gains, market experts warned that elevated stocks of fuel products are expected to keep prices under pressure in the near-term.

WTI crude futures are nearly 17% lower from their 2016 highs above $50 a barrel scaled in early June, as signs of an ongoing recovery in U.S. drilling activity combined with growing gasoline stockpiles weighed.

According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by seven to 381, the sixth consecutive weekly rise and the ninth increase in 10 weeks.

The rebound in the number of rigs over the last six weeks has added to worries about a global glut of crude.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery inched up 10 cents, or 0.24%, to trade at $45.49 a barrel.

A day earlier, Brent prices rallied $1.12, or 2.53%, as sentiment was boosted amid renewed hopes for an agreement among exporters to freeze output.

According to people familiar with the matter, several OPEC members, including Venezuela, Ecuador and Kuwait, are now pushing for fresh talks on setting new limits for oil production this fall in an effort to stabilize the market.

Qatar’s Energy Minister Mohammed Bin Saleh al-Sada, who is serving as OPEC president this year, confirmed the oil cartel will hold on an informal meeting on the sidelines of the International Energy Forum conference in Algeria scheduled to take place September 26-28.

However, market players remained skeptical that the meeting would result in any concrete actions. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative.

Meanwhile, Venezuelan Oil Minister Eulogio del Pino said that a meeting between OPEC and non-OPEC countries may take place "in the coming weeks," however Russian Energy Minister Alexander Novak currently sees no grounds for new talks on freezing production.

London-traded Brent futures are down almost 15% since peaking at $52.80 in early June, as prospects of increased exports from Middle Eastern and North African producers, such as Iraq, Nigeria and Libya, added to concerns that a glut of oil products will cut demand for crude by refiners.

Oil turns higher ahead of API supply report
 

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