US data in focus as oil prices dip

Oil prices edged lower on Tuesday, as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products to gauge the strength of demand in the world’s largest energy consumer.

Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (2130GMT) Tuesday. Official data from the Energy Information Administration will be released Wednesday, amid forecasts for an oil-stock drop of around 2.8 million barrels.

U.S. West Texas Intermediate (WTI) crude futures shed 21 cents, or about 0.4%, to $56.55 a barrel by 3:35AM ET (0835GMT). It reached its best level since July 2015 at $57.92 last week.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., dipped 24 cents, or around 0.4%, to $62.92 a barrel. The global benchmark rallied to $64.65 last Wednesday, a level not seen since June 2015, but traders said the market had lost some momentum since then.

Oil prices finished mixed on Monday as the prospect of further rises in U.S. output undermined ongoing OPEC-led production cuts aimed at tightening the market.

The U.S. government said on Monday U.S. shale production for December would rise for a 12th consecutive month, increasing by 80,000 barrels per day (bpd).

Despite the cautious sentiment, crude prices stayed within sight of their strongest level in more than two years amid optimism that oil producing countries will agree to extend an output cut at their meeting at the end of this month.

Discussions are continuing in the run-up to the Nov. 30 meeting, which oil ministers from OPEC and the participating non-OPEC countries will attend.

OPEC’s monthly oil market report released on Monday showed that output from the 14-country producer group fell by about 150,000 bpd from September to 32.59 million bpd. The cartel also raised its forecast for oil demand this year and in 2018.

Oil’s rally, which began in early October, has been largely driven by growing indications that the crude market was finally starting to rebalance. Brent is over 40% above June’s 2017 lows, while WTI is one-third higher than its 2017 lows.

In other energy trading Tuesday, gasoline futures slumped 0.6 cents, or 0.4%, to $1.782 a gallon, while heating oil declined 0.7 cents to $1.924 a gallon.

Natural gas futures lost 6.6 cents, or almost 2%, to $3.101 per million British thermal units, as traders reacted to forecasts showing a return to mild weather after a cold spell in the eastern U.S.