On Thursday oil futures retreated as investors cut their bets prior to the meeting next week in Vienna of members of the Organization of Petroleum Exporting Countries.
The group in all likelihood will enter into an agreement to extend it current production cuts for members of the cartel as well as other produces like Russia.
The cuts in production, which started back in January, have not made any notable change in the global supply. Inventories remain above the five-year average, the level major producers want oil stock to return in hopes of increasing prices, which are still less than 50% of what they were in 2014.
After settling Wednesday at their highest price in close to one month, futures for light, sweet crude delivered in June were down 0.4% equal to 18 cents for a barrel price of $48.89. July Brent crude in London was also down 4% equal to 19 cents to a barrel price of $52.01.
Wednesday’s gains were prompted by news oil production in the U.S. last week declined for the first time in the past three months. A steady increase in output has been the key in damping the expectations that the output cuts led by OPEC would boost prices successfully.
There is much uncertainty that prices will increase even with an extension of production cuts.
One commodities strategist said he is worried about what will take place with prices of oil once the production cut pact is ended. He added that although prices might increase during the next quarter, drops could begin afterward.
Another analyst said there should not be any real significant price boost over the short-term if a production cut is announced next week.
However, continued intervention would tighten up the market which would be in turn price-supportive.
June futures for gasoline were down 0.2% to a gallon price of $1.60, while diesel dropped by 0.2% as well to $1.53 and ICE gasoil for June was off by 0.9% to a metric ton price of $459.50.
The results of the OPEC-led cuts in oil production have not resulted in stabilizing the price of oil due to the ratcheting up of production in U.S. shale helping to offset those production cuts by OPEC and other big producers such as Russia.