Oil prices struggled for direction Monday as investors awaited the results of an OPEC meeting later in the day and new data later this week on U.S. inventory levels.
October Brent crude LCOV7, -0.34%, the global benchmark, fell 5 cents, or 0.1%, to $52.67 a barrel, while West Texas Intermediate crude oil futures for SeptemberCLU7, -0.06% were up 14 cents, or 0.3%, at $48.65 a barrel.
The Organization of the Petroleum Exporting Countries is set to hold a technical meeting with non-cartel members in Vienna Monday to discuss compliance levels with the cartel’s production cut deal.
“Given rising OPEC production over recent months, there will be some concerns by member countries over slipping compliance,” analysts at ING Bank wrote in a note Monday morning.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap production at around 1.8 million barrels a day lower than peak October 2016 levels, with the goal of reducing the global oil glut and boosting prices. The deal was extended in May until March 2018.
But compliance with the agreement fell to its lowest level this year in July, at 75%, due to higher output from Iran, Equatorial Guinea, Gabon, Algeria and the United Arab Emirates, according to the International Energy Agency’s latest monthly report.
OPEC crude production also increased last month due to an unexpected surge in production in Libya and Nigeria, according to a recent report form the cartel. Those two member countries were exempt from the compliance deal because their oil industries had been damaged by internal strife.
Investors Monday were also looking ahead to see whether weekly U.S. data on Wednesday would confirm a further drawdown in U.S. crude stocks, according to Giovanni Staunovo, a commodities analyst at UBS Wealth Management.
“There is the risk that inventories start to increase again” if the recent decline in stocks primarily was fueled by seasonal factors like increased car usage, Staunovo said.
The U.S. Energy Information Administration said last week that crude inventories had been reduced by 9 million barrels in the week ended Aug. 11, bringing the total drawdown since March to 69 million barrels.
At the same time, oil-field services firm Baker Hughes Inc. said Friday that the number of rigs drilling for oil in the U.S. fell by five in the previous week, a further sign that drillers are responding to the lower price environment by pulling back.
Among refined products in Monday’s trade, gasoline for September RBU7, -1.15% slid 0.7% to $1.61 a gallon, while ICE gasoil for the same month changed hands at $480.25 a metric ton, up 1.7% from the previous settlement.
Natural gas for September NGU17, +1.00% climbed 1.2% to $2.93 per million British thermal units.