Oil prices continued lower in volatile action on Tuesday as traders remained concerned about a potential rise in output and an uncertain economic and political backdrop.
West Texas Intermediate crude CLQ8, +0.06% dropped 16 cents, or 0.2%, to $67.90 a barrel, while Brent oil LCOU8, -0.01% — the international benchmark — fell 19 cents, or 0.3%, to $71.64 a barrel.
Both contracts settled with sharp losses on Monday, ending more than 4% lower. The selloff in oil futures came after reports that the Donald Trump administration is considering releasing oil from the U.S. Strategic Petroleum Reserve and reports Saudi Arabia has offered to increase output for Asian customers.
“The oil market has been driven by supply considerations for years now. Given the uncertain and unpredictable political and economic backdrop it is as easy to make a bearish case for oil as a bullish one. In the first half of the year we had a very high OPEC+ compliance against an ever-increasing US shale oil production to deal with. The former turned out to be the winner,” said Tamas Varga, analyst at brokerage PVM Oil Associates, in a note.
“Global oil inventories fell and prices were driven higher. To maintain this balance major oil producers decided to raise production but oil prices kept going higher due to actual and anticipated supply shortages. This sentiment is changing now. It is not entirely clear if this change will last, nevertheless it is a timely exercise to take stock of the latest developments on the supply front,” he added.
Later on Tuesday, traders will get supply data from the U.S., when the American Petroleum Institute releases weekly stockpiles numbers.
In other energy products, gasoline prices RBQ8, +0.11% were flat at $2 a gallon, while heating oil was up 0.1% at $2.06 a gallon.
Natural gas NGQ18, +0.29% rose 0.3% to $2.77 per million British thermal units.
