Oil Futures Drop on Tuesday as Traders Anticipate Increase in Crude Supply

01155_crudeoildown040416

Crude oil prices continued to free fall on Tuesday, as traders were discouraged with OPEC’s attempts to favorably broker a production output agreement, according to Bloomberg MarketWatch.

On the New York Mercantile Exchange, December West Texas Intermediate crude settled at $46.67 a barrel, down 19 cents, or 0.4%, after trading between a low of $46.20 and a high of $47.35.

On the London ICE Futures Exchange, January Brent crude, the global benchmark, lost 47 cents, or 1%, to end trading at $48.14 a barrel.

“It’s make-or-break time for the oil market, at this stage,” said Nico Pantelis, head of research at Secular Investor. “We are keeping our positive bias for now.”

Many traders are skeptical of OPEC’s ability to successfully reach a deal to scale back production. In fact, more OPEC producers are lobbying to be exempt from the deal. Iraq has reiterated it should be excluded from a production deal because the oil revenue is needed to fund the country’s war against ISIS. Venezuela is also seeking exemption due to a severe recession. Russia has also shown a lack of commitment to an output deal as it continues to produce crude oil at a jaw-dropping pace.

Traders will be monitoring the weekly production and inventory data reports. Analysts surveyed by S&P Global Platts estimate domestic crude oil stocks rose 1.9 million barrels in the week ending October 28. The U.S. Energy Information Administration data is due Wednesday while the American Petroleum Institute issues its report late Tuesday.

Meanwhile, December natural gas fell 12.4 cents, or 4.1%, to settle at $2.902 per million British thermal units on the New York Mercantile Exchange. Warmer weather is expected to undercut early-season heating demand for natural gas.