NEW YORK (Reuters) - Oil prices fell more than 1 pct on Tuesday but continued to trade in a tight range, as concerns about rising U.S. crude inventories ahead of data overshadowed OPEC production cuts.
U.S. crude stockpiles have been rising for seven consecutive weeks, and forecasts of an eighth build of 2.9 million barrels last week fueled worries that demand growth may not be sufficient to soak up the global crude oil glut.[EIA/S]
Inventory data is due from industry group the American Petroleum Institute at 4:30 p.m. EST and the government’s report at 10:30 a.m. EST on Wednesday.
By 12:09 p.m. EST, U.S. West Texas Intermediate crude futures were down 77 cents at $53.28 a barrel and Brent crude fell 64 cents to $55.29 a barrel.
For the month, WTI was on track for 0.8 percent increase and Brent set for 0.8 percent fall.
Gasoline futures prices also weighed down the petroleum complex.
U.S. gasoline futures fell 3.4 percent to $1.4805 a gallon, on track for 3.2 percent decrease in February.
Prices were under pressure on the final trading day for the March contract, the final month in which gasoline that complies with environmental standards for winter-grade fuel is offered. Abundant supplies of the fuel, which has different additives from those required in the summer, have weighed on prices.
The Organization of the Petroleum Exporting Countries has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards - the United Arab Emirates and Iraq - pledge to catch up quickly with their targets.
While the Nov. 30 agreement to reduce production prompted oil prices to rise $10 a barrel, they have been trading in a narrow $3 range in recent weeks.
“Without full compliance by the OPEC cartel and non-OPEC producers, and signs that demand is picking up, we are positioned for a correction,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
“There’s a risk that some of the new longs will start to head for the exits, and that’s where we could see a correction.”
Still, he said, prices are likely to stay locked in their current band unless there are signs that the production cut agreement has failed, or that compliance is dropping.
OPEC agreed to curb output by about 1.2 million barrels per day (bpd) from Jan. 1, the first cut in eight years. Underlying the high compliance to the deal, Iraq trimmed exports of Kirkuk crude oil to help meet its output target.
In addition, 11 non-OPEC oil producers have promised to cut their output - Russia reduced production by 124,000 barrels per day this month compared with October levels, Interfax reported on Tuesday citing a source familiar with the data.
Broadly, analysts and economists expect an average 2017 Brent price of 57.52 a barrel, according to a Reuters poll.
Oil industry and OPEC country sources told Reuters Saudi Arabia wanted crude prices to rise to $60 a barrel this year, a level it saw as encouraging investments but not spurring a fresh surge in U.S. shale production.
But a report from consultancy Rystad Energy issued earlier this month said the break-even price for U.S. shale oil producers fell last year to an average $35 per barrel.
Additional reporting by Naveen Thukral in Singapore and Sabina Zawadzki in London; Editing by Marguerita Choy and David Evans