By Jenny W. Hsu
Crude oil prices were volatile in Asian trade Tuesday as concerns over a stubborn global supply overhang kept prices in a tight range.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $52.13 a barrel at 0408 GMT, up $0.17 in the Globex electronic session. March Brent crude on London's ICE Futures exchange rose $0.22 to $55.16 a barrel.
Market participants had placed bets on oil prices rising after the Organization of the Petroleum Exporting Countries and 11 other non-cartel producers in November agreed to rein in their productions.
However, with the pact in effect for less than a month, many people are unsure whether the agreement will becarried out and if participating producers will comply with their allotted quota.
Overnight, prices fell almost 4% after data from industry firm ClipperData showed Iran's floating storage had nearly halved since September, a sign that the country is aggressively taking advantage of the higher prices to sell more.
The firm also reported Iraqi exports going through the southern oil ports of Basra to be the highest in four years of tracking, just shy of 3.5 million barrels a day in January. Baghdad, however, has stressed that it will still be able to hit its 210,000-barrel-a-day limit this month.
Analysts say Iraq's record high exports is a reminder that the market is still mired in surplus despite efforts to reduce the overhang.
"This doesn't mean that the market won't rebalance in 2017, but it does suggest that it may not happen to the extent or on the schedule that the bulls would prefer," said Tim Evans, a Citi Futures analyst.
OPEC is expected to release the January production data next month which will give traders and investors a better idea on the compliance by oil producers.
Another area of concern is the U.S., which is said to be in the process of selling barrels from its strategic reserve, likely adding to the pressure on prices, analysts at Citigroup said. U.S. shale production could also pivot higher in the future as data shows the number of rigs digging for oil in the U.S. have increased for ten straight weeks. The U.S. now has the highest number of rigs in operation, at 529, in more than a year.
U.S. crude inventories, a highly-watched gauge of the supply there, is likely to show an increase of 1.75 million barrels in the week ended January 6. Citigroup also forecasts gasoline stocks to have grown by 1.25 million barrels while distillate stocks have shrunk only by 130,000 barrels in the same week.
Official data from the Energy Information Agency will be released on Wednesday.
Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--rose 76 points to $1.5783 a gallon, while February diesel traded at $1.6449, 73 points higher.
ICE gasoil for January changed hands at $480.25 a metric ton, down $2.75 from Monday's settlement.
Write to Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
January 09, 2017 23:54 ET (04:54 GMT)
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