US crude settles at $47.66, down 2.4%, on Libya and US supply concern
Oil prices dipped on Tuesday as higher output in the United States, Canada and Libya outweighed lower production by Russia and major OPEC exporters ahead of the release of U.S. data expected to show a fourth consecutive decline in crude stocks.
Losses accelerated shortly before Tuesday's settlement. John Kilduff, founding partner at energy hedge fund Again Capital, pointed to a Bloomberg report that the Libyan prime minister and a rival commander had agreed to set up a power-sharing council.
That would compound concerns about the country's output after Libya's National Oil Co said on Monday that production had risen above 760,000 bpd to its highest since December 2014, and it plans to keep boosting production.
"We've got more output from Libya and the United States and there is no certainty OPEC will keep production cuts in place at their meeting in May," said Phil Davis, managing partner at PSW Investments in Woodland Park, New Jersey.
"Until OPEC removes the fear that they might not extend their production cuts, it will be hard for oil to get a bid," Davis said.
U.S. light crude settled down $1.18, or 2.4 percent, at $47.66, off a session peak of $49.28 and extending Monday's 1 percent decline.
Benchmark Brent crude oil was down $1.17, or 2.3 percent, at $50.35 a barrel by 2:34 p.m. ET (1834 GMT), after earlier rising as high as $52.16.
That kept both U.S. and Brent futures in technically oversold territory on most days since late April. WTI was trading at its lowest since April 27.
The Organization of the Petroleum Exporting Countries and other producers plan to meet on May 25 and are widely expected to keep output limits for the rest of the year.
Last year, OPEC and other producers including Russia agreed to cut output by 1.8 million barrels per day (bpd) for the first half of 2017 to try to reduce a global glut.
Russian oil production fell slightly last month to 11 million bpd, almost hitting its output target under the deal with OPEC, Energy Ministry data showed on Tuesday.
OPEC oil output fell OPEC oil output fell for a fourth straight month in April, a Reuters survey showed on Tuesday, dropping to 31.97 million bpd as Nigeria and Libya pumped less crude.
But more oil from Angola and higher UAE output than originally thought helped OPEC compliance with its production-cutting deal slip to 90 percent from a revised 92 percent in March, the survey indicated.
In addition to Libyan output gains, U.S. crude output is at its highest since August 2015, while the Syncrude Canada oil sands project has started shipping crude from its Mildred Lake upgrader again after cutting production due to a fire in March.
Analysts forecast U.S. crude inventories fell about 2.2 million barrels last week, according to a Reuters poll, making a fourth straight week of declines from a record high reached at the end of March. Stocks, however, are still seen about 10 percent above year-end levels.
Refined product stockpiles were seen up, the poll showed.
U.S. gasoline futures gave up early gains and fell about 1 percent on Tuesday. They have fallen nearly 14 percent during the last three weeks as inventories rise and signs of lukewarm demand persist.
The American Petroleum Institute (API), an industry group, is scheduled to release inventory data for the week to April 28 at 4:30 p.m. ET (2030 GMT) on Tuesday.
— CNBC's Tom DiChristopher contributed to this report.