Oil prices on Thursday, February 2, dipped but stuck to its recent tight trading range after gains over the past two sessions lifted prices to their highest level in nearly a month.
March West Texas Intermediate crude CLH7, -0.19% fell 30 cents, or 0.6%, to $53.58 a barrel on the New York Mercantile Exchange, but it settled Wednesday at its highest level since Jan. 6, according to FactSet data. Brent crude for April LCOJ7, +0.05% shed 23 cents, or 0.4%, to $56.57. “Oil is becoming more and more stable because of expectations of a much tighter oil market this year,” said Fawad Razaqzada, technical analyst at Forex.com. “The deal to limit oil output by OPEC and some countries outside of this group has been implemented and production has started to fall.”
‘Oil is becoming more and more stable because of expectations of a much tighter oil market this year.’
Earlier this week, a Reuters survey showed that members of the Organization of the Petroleum Exporting Countries have reached 82% compliance with the roughly 1.2 million-barrel reduction pledge. “So far, there has been no evidence to suggest the deal will collapse and oil market participants therefore have little reason to expect a collapse in prices,” said Razaqzada.
Still, crude prices would likely have been “somewhat higher at this stage had it not been for growing expectations that oil production in the U.S. is about to rise sharply again,” he said.
Data from the Energy Information Administration released Wednesday, however, showed that total U.S. crude production modestly declined for the week ended Jan. 27, but it also revealed a much larger-than-expected climb in crude inventories. Meanwhile, in recent weeks, data has showed more drilling rigs being put back to work in the wake of OPEC’s stated cuts. Elsewhere on Nymex Thursday, prices for natural gas showed little reaction to the latest weekly data on U.S. supplies of the fuel.
The EIA said supplies of natural gas fell by 87 billion cubic feet for the week ended Jan. 27. That was generally in line with the decline of 83 billion expected by analyst polled by S&P Global Platts. March natural gas NGH17, +0.66% fell 2.3 cents, or 0.7%, to $3.145 per million British thermal units. It was trading at $3.129 before the data.
March gasoline RBH7, -1.53% lost 3.8 cents, or 2.4%, to $1.542 a gallon and March heating oil HOH7, -0.57% lost 1.7 cents, or 1%, to $1.657 a gallon