A stronger dollar and uncertainty surrounding the impact of hurricane Irma put some downward pressure on oil prices, although with some reluctance to trade aggressively given the high degree of uncertainty and OPEC rhetoric provided net support.
WTI oil prices dipped sharply during the New York session on Monday with a slide to near $47.0 p/b before a quick rebound to just above $48.00 in choppy trading.
The dollar has maintained a solid tone in currency markets and the firmer US currency has had some impact in curbing support for oil prices.
Prices were little changed in Asian trading on Tuesday before edging lower in European trading with WTI trading around $47.80 p/b.
There were further expectations that US refineries would continue to resume output gradually with Motiva facility starting to restart production.
There was still a high degree of uncertainty surrounding the situation in Florida following the impact of hurricane Irma. Although damage to the economy appeared to be less than feared, there will still be a significant impact in curbing demand in the short term.
Oil prices still gain some degree of support from expectations of firm global demand and the potential for OPEC output cuts to be extended.
Just ahead of the US open, there were reports that OPEC would consider extending production curbs for more than 3 months which pushed WTI to just above $48.0 p/b while Brent traded just above $54.0 p/b.
The latest inventories data will come back into focus with the API data due for release after Tuesday’s New York close with the latest EIA data on Wednesday.
There are expectations that there will be a further increase in inventories for the latest week due to the impact of hurricane Harvey with gasoline stocks expected to register a second successive draw.
There will still be a high degree of uncertainty over the data and market reaction to the data is also likely to be more subdued, especially with expectations that distortions will persist for the next few weeks at least.
WTI Oil Price 4-Hour Chart