Crude-oil futures tumbled again Tuesday after posting new lows for the year in overnight trade.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November CLX4, -0.34% traded at $85.07 a barrel, down $0.67 in the Globex electronic session. November Brent crude LCOX4, -0.34% on London’s ICE Futures exchange fell $0.73 to $88.16 a barrel.
Later Tuesday, the International Energy Agency will publish its monthly oil market report, while the more closely-watched weekly U.S. stockpile data are due Thursday.
Market participants are increasingly of the view that much of the recent selloff is overdone and has been much steeper than warranted by weak demand and supply fundamentals.
“The large downward move in oil over the past two weeks was mostly speculative, in our view. While the market remains oversupplied and lower OPEC production should be required, we see few signs of new deterioration in fundamentals,” Morgan Stanley analyst Adam Longson said in a report.
Physical oil market indicators also appear to be firming, such as the clearing up of surplus West African oil cargos and refinery run rates already starting to rise Asia and Europe, Mr. Longson said.
He said the Organization of the Petroleum Exporting Countries is right to expect a material improvement in demand and wouldn’t be surprised “if the cartel waits to see how markets evolve this winter before making any hasty decisions.”
Oil markets are looking to the upcoming OPEC meeting in November for cues on oil supply levels, and recent price cuts by OPEC oil producers have driven some of the speculation regarding production levels.
But despite Iraq cutting November oil prices to Asia yesterday, prices didn’t react much, indicating that markets have already factored them in, analyst Daniel Ang at Singapore’s Phillip Futures said.
He expects November WTI crude prices today to trend towards its support level of $83.57 a barrel and the Brent December contract to trend towards $87.12 a barrel. The Brent contract for November is due to expire on Thursday.
Nymex reformulated gasoline blendstock for November RBX4, -0.21% --the benchmark gasoline contract--fell 142 points to $2.2411 a gallon, while November diesel traded at $2.5422, 146 points lower.
ICE gasoil for November changed hands at $760.25 a metric ton, down $0.25 from Monday’s settlement.
