Oil extended its decline after an industry report was said to show disappointing numbers for crude and gasoline stockpiles.
Futures slid further in after-market trading in New York following the release of data from the American Petroleum Institute, which was said to show a 1.56 million-barrel drop in crude inventories last week. Analysts surveyed by Bloomberg expect to see a 2.45 million decline when the Energy Information Administration releases its data on Wednesday. The API numbers were also said to show a rise in gasoline storage, when traders were expecting a decline.
“Overall, it’s not really a bearish report. It’s definitely less bullish than what is expected,” Kyle Cooper, director of research at IAF Advisors in Houston, said by telephone. “There could be some trepidation as to what the EIA will say tomorrow.”
Prices took a leg lower during Tuesday trading on concerns of an overbought market and rising shale production. Strength in the dollar also acted as a downward force.
OPEC said its World Oil Outlook report on Tuesday that shale output will soar to 7.5 million barrels a day in 2021, 56 percent higher than it forecast a year ago. At the same time, the EIA said that it sees domestic crude output averaging 9.95 million barrels a day next year, topping the 9.6 million produced in 1970.
West Texas Intermediate for December delivery traded at $56.94 as of 5:28 p.m. after settling at $57.20 a barrel on the New York Mercantile Exchange. Total volume traded was about 12 percent above the 100-day average. Prices climbed $1.71, or 3.1 percent, to $57.35 on Monday, the highest close since June 2015.
The U.S. benchmark’s 14-day relative strength index is hovering above 70, a level that signals the commodity is overbought.
Brent for January settlement slipped 58 cents to end the session at $63.69 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $6.26 to January WTI.
The Bloomberg Dollar Spot Index, a gauge of the dollar against 10 major peers, rose as much as 0.4 percent. A stronger greenback reduces investor interest in commodities.
The API report also showed gasoline stockpiles rose by 520,000 barrels last week, according to people familiar with the data. That compares to a gasoline stockpile decline of 1.85 million barrels seen in a Bloomberg survey. Distillate supplies fell by 3.13 million barrels and Cushing, Oklahoma crude inventories rose by 812,000 barrels in the API report, the people said.
OPEC sees no opposition to prolonging its production cuts beyond March and discussions are now focusing on the duration of the extension, said the group’s top official. U.S. Strategic Petroleum Reserve crude stocks declined to the lowest level since October 2004, DOE data showed.
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