New York — Oil futures fell Tuesday, coming off the morning highs on US dollar strength and a US crude stock build.
October ICE Brent settled down 15 cents at $72.46/b, off its intra-day high of $73.93/b. September NYMEX crude settled 16 cents lower at $67.04/b, down from $68.37/b earlier in the day.
Crude futures fell further following the settle, with September NYMEX crude dropping to $66.60/b after the American Petroleum Institute reported a US crude stock build of 3.66 million barrels for the week ending August 10, as Tweeted by numerous outlets. Analysts polled by S&P Global Platts were looking for US crude stocks to have declined by 1.7 million barrels.
The market will look to the US Energy Information Administration data due out Wednesday for confirmation of the API stock build.
With a lack of fresh news for the crude bears or bulls to grab onto early Tuesday, the market was moving with fluctuations in the US dollar index, said Price Futures Group analyst Phil Flynn.
Crude futures appear to be taking a breather from an upward trend that was in place since end-June 2017. The front-month NYMEX contract climbed from roughly $43/b in June 2017 to $74.15/b June 29 of this year, with a few dips along the way.
It is difficult to tell if the current move lower is just another temporary dip. Crude futures are still supported by strong global demand for refined products and renewed US sanctions against Iran, which are expected to remove up to 1 million b/d from the market when they kick in November 4.
But recent attempts to break above $70/b have failed, with NYMEX crude now probing $66/b support.
Crude futures were bolstered earlier in the day on expectations of the US crude stock draw, and on news Monday that Saudi Arabia had cut production by 200,000 b/d in July to 10.29 million b/d.
Still, secondary sources pegged the Saudi decline at 50,000 b/d, and other OPEC members have reported increasing output. Libya's crude output has climbed above 1 million b/d for the first time since early June, sources said Tuesday.
Libya remains far from stable, however, so production is still at risk.
US production growth is slowing. The EIA said Monday it expects unconventional production to increase 93,000 b/d in September to 7.522 million b/d, the smallest monthly increase since November 2017.
Slower production growth would be supportive for NYMEX crude futures, although growth is expected to pick back up once more takeaway capacity is built out of the Permian Basin next year.
While analysts polled by Platts were looking for US crude stocks to soon decline because of high refinery runs and stable production, US crude exports have slowed.
On a four-week moving average, US crude exports at 1.83 million b/d the week ending August 3 were lower for the fourth week in a row, EIA data shows.
Granted, the average mid- to late June was inflated by a record-high 3 million b/d weekly export figure June 22.
Platts cFlow trade-flow software shows US crude exports at roughly 1.7 million b/d the week ending August 10.
Chinese buyers have cut back on US barrels, at least for the time being, because of the ongoing tariff battle between the US and China. US crude bound for China can find other markets, of course, assuming arbitrage economics are favorable.
In refined products, September NYMEX ULSD settled 83 points lower at $2.1287/gal, while September NYMEX RBOB settled 1.94 cents higher at $2.0341/gal.
ULSD has been supported recently by tight inventories, and expectations that demand will remain strong because of economic growth.
However, the Mediterranean diesel market weakened Tuesday as supply was looking more balanced, traders said.
