Oil prices steady after overnight tumble on dollar strength, China concerns

Also, a surprising increase in the United States oil rig count dented hopes for an end to the global supply glut.

The American Petroleum Institute will issue its weekly USA oil inventory data at 4:30 p.m. EDT, ahead of the US government's official report on Wednesday. However, WTI crude oil prices once again failed to sustain above the $50 per barrel levels.

According to a Reuters poll, US crude stockpiles dropped last week for the seventh week in a row, and gasoline and distillate inventories were also likely down.

Futures fell 0.8% in NY after Monday's 2.5% decline, the biggest drop in more than five weeks.


Analysts polled by S&P Global Platts expect the EIA report to show that crude supplies fell 3.6 million barrels for the week ended August 11.

West Texas Intermediate for September delivery was at $47.33 a barrel on the New York Mercantile Exchange, down 25 cents, at 8:32 a.m. local time. "This results in a tug of war that we have witnessed all year and the final outcome is a range-bound market", said Matt Stanley, a commodities broker at Freight Investor Services in Dubai reports CNBC. The price for a barrel of oil dropped below $30 per barrel past year as gains in US oil production added to supply-side concerns from members of the Organization of Petroleum Exporting Countries defending a market share with robust output. Phil Flynn, senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter the leveling effect may be overstated because production growth isn't keeping up with demand. Not a lot has changed despite the Opec and Russian Federation efforts recently. While the markets debate whether OPEC will have to cut deeper, Russian oil producer Gazprom Neft has said that it plans to resume production from its mature fields once the production cut agreement expires.

The industry-funded American Petroleum Institute will release its inventory data later on Tuesday.

In a report Monday, the EIA said it expects to see a climb of 117,000 barrels a day in September to 6.149 million barrels a day The report has shown increases in shale-oil production every month so far this year. Even so, Citigroup Inc.'s Ed Morse says shale will win over OPEC on oil, as USA drillers can survive due to hedging. "We had seen in the past few weeks that demand growth was robust, and this turned that on its head".

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  • Rita Burton