Oil prices inched lower on Tuesday ahead of U.S. crude inventories data, as the market weighed the impact of rising U.S. crude output versus last week’s deal between OPEC and other crude producers to extend output curbs.
International benchmark Brent crude futures were trading down 10 cents, or 0.2 percent, at $62.35 per barrel by 0651 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down 4 cents, or 0.1 percent, at $57.43 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers last week rolled over their agreement to cut output by 1.8 million barrels per day (bpd) until the end of 2018, aiming to erode a global glut and drive up prices.
Although the world’s major oil producers reached an agreement last week, Kazakh Energy Minister Kanat Bozumbayev said on Tuesday that complying with the global oil output cut deal will be complicated for Kazakhstan, one of the non-OPEC members who supported the pact.
Goldman Sachs said Saudi Arabia and Russia showed a stronger commitment to extending cuts and raised its Brent and WTI spot forecasts for 2018 to $62 and $57.50 per barrel respectively.
“By 2019, however, we believe the response of shale and other producers to higher prices will incentivize OPEC and Russia to pare back their now greater spare capacity, leaving risks to prices skewed to the downside,” the bank added.
In November, OPEC crude oil output fell by 300,000 bpd to its lowest since May, according to a Reuters survey released on Monday.
However, data last week showed U.S. crude output rose to nearly 9.5 million bpd in September, the highest monthly production since 2015.
“Both contracts (Brent and WTI) have now tested and failed major resistance levels, and all eyes will now be on the U.S. crude inventory data due tonight and tomorrow,” said Jeffrey Halley, senior market analyst at OANDA.
While rising U.S. oil production remains a hurdle for OPEC’s efforts to rebalance the market, U.S. crude inventories likely fell last week, marking their third straight weekly drop, a preliminary Reuters poll showed.
Seven analysts polled ahead of inventory reports from the industry group American Petroleum Institute (API) and the U.S. Department of Energy’s Energy Information Administration (EIA) estimated, on average, that crude stocks fell 3.5 million barrels in the week ended Dec. 1.
The official government inventory data is due on Wednesday at 10:30 a.m. EDT (1430 GMT).