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Oil prices struggle for direction as traders await supply data, OPEC+ committee meeting

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Oil futures remained in a holding pattern Tuesday as traders looked ahead to data on U.S. crude supplies and a meeting by an OPEC+ panel charged with monitoring the effect of production cuts by major producers.

West Texas Intermediate crude for September delivery
CL.1,
-0.72%

CLU20,
-0.72%

closed unchanged at $42.89 a barrel on the New York Mercantile Exchange. The global benchmark, October Brent crude
BRN00,
-0.81%
,
gained 9 cents, or 0.2%, to finish at $45.56 a barrel on ICE Futures Europe.

Crude gained ground Monday, buoyed in part by reports that compliance with output cuts by members of OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies, notably Russia — ran at a historically high 94% to 97% in July, according to surveys. OPEC+’s Joint Technical Committee, which met Monday, pegged compliance at 95%, analysts said.

The OPEC+ Joint Ministerial Monitoring Committee, which makes recommendations on output, is set to meet Wednesday, but is largely expected to take a wait-and-see approach after members in August went ahead with a plan to scale back output cuts from 9.7 million barrels a day to 7.7 million barrels a day, albeit with some producers who had failed to abide by earlier restrictions agreeing to maintain deeper cuts.

Read:OPEC+ committee expected to take ‘wait-and-see’ approach on output as oil prices reflect ‘new normal’

“Compliance with the previous cuts has been high though which will reinforce confidence in any future action that may be necessary but for now, the best thing for the group may be to just hold fire as further setbacks in the coming months are inevitable, again,” said Craig Erlam, senior market analyst at OANDA, in a note.

Traders will also be looking toward data on U.S. supplies. The American Petroleum Institute is expected to release its weekly take on crude inventories after the closing bell Tuesday, while the Energy Information Administration’s more closely followed weekly data is due Wednesday morning.

Analysts surveyed by S&P Global Platts expect the EIA data to show U.S. crude supplies fell 3.8 million barrels last week, while gasoline stocks are expected to show a decline of 2 million barrels. Distillate supplies are forecast to fall 900,000 barrels.

A fall in the U.S. dollar was also seen underpinning commodity prices. A weaker dollar can be supportive for commodities priced in the U.S. unit, making them less expensive to users of other currencies. The ICE U.S. Dollar Index
DXY,
-0.60%
,
a measure of the U.S. currency against a basket of six major rivals, was down 0.6% at 92.312 after hitting its lowest level since May 2018.

Read:Why the dollar’s fall could turn into a rout if ‘political disarray’ continues

In other action, September gasoline
RBU20,
+0.46%

rose 1.3 cents, or 1%, to settle at $1.283 a gallon, while September heating oil
HOU20,
+1.21%

gained 2.13 cents, or 1.7%, to finish at $1.2604 a gallon.

September natural-gas futures
NGU20,
+3.24%

advanced 7.8 cents, or 3.3%, to close at $2.417 per million British thermal units.



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