NEW YORK (Reuters) - Brent crude futures settled lower on Tuesday on bets OPEC will not cut output to stem a supply glut when the world’s biggest oil producers meet later this week, while U.S. crude steadied as some traders expected a stockpile drop.
Expectations are high that Friday’s meeting of the Organization of the Petroleum Exporting Countries in Vienna will choose to continue pumping crude at record levels to defend market share against non-member oil producers such as the United States and Russia.
The U.S. Labor Department’s closely watched jobs data for November was also due on Friday. Stronger employment numbers could help the Federal Reserve decide on the first U.S. rate hike in nearly a decade, sending the dollar higher. That, and the likelihood of no OPEC cuts, could drive Brent below the $40-a-barrel mark, traders said.
“We see renewed selling after the OPEC meeting is defined since we expect oil balances to tilt further in a bearish direction amidst additional strengthening in the U.S. dollar,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Brent LCOc1 settled down 17 cents, or 0.4 percent, at $44.44 a barrel.
U.S. crude’s West Texas Intermediate (WTI) futures CLc1 finished the session up 20 cents at $41.85.
While WTI was also under pressure from the global oversupply in oil, it could see some reprieve if U.S. government data on Wednesday shows an inventory decline.
A Reuters poll of analysts forecast on Tuesday that U.S. crude stockpiles possibly fell 500,000 barrels last week after nine consecutive weeks of builds.
But industry group the American Petroleum Institute reported a 1.6 million-barrel crude build, pressuring WTI into the negative in post-settlement trade.
Official inventory data from the U.S. Energy Information Administration is due on Wednesday at 10:30 a.m.
Both Brent and WTI saw support earlier on Tuesday as U.S. gasoline RBc1 rose as much as 6 percent, reacting to higher requirements for refiners to meet U.S. renewable fuel standards.
The rally came after the Environmental Protection Agency on Monday raised previous targets for the amount of biofuels to be mixed into motor fuel for the three years to 2016.
A weaker dollar also limited the downside in oil. The dollar posted its biggest daily loss in nearly two weeks against a basket of currencies .DXY, making commodities denominated in the greenback, including oil, more affordable for holders of the euro and other currencies.
Additional reporting by Jarret Renshaw in New York and Amanda Cooper in London; editing by Marguerita Choy, Diane Craft and Chizu Nomiyama