Oil settled down on Tuesday after hitting one-month lows, ahead of data likely to show a US crude inventory build and on renewed doubts about whether Opec will follow through with proposed output cuts. The American Petroleum Institute (API), an industry group, will report weekly US crude stockpiles numbers at 4:30 pm EDT (2030 GMT) ahead of official inventory data from the government on Wednesday. Analysts expect stockpiles to have risen 1 million barrels last week after unseasonal declines in seven of the past eight weeks.
Brent crude settled down 47 cents, or 1 percent, at $48.14 a barrel. Its session low was $47.72, the lowest since September 28. US West Texas Intermediate (WTI) crude fell 19 cents, or 0.4 percent, to settle at $46.67 per barrel after a one-month low at $46.20. Crude prices rose earlier in the session as US dollar slid, making greenback-denominated oil cheaper for users of other currencies.
Crude was also helped initially by a gasoline rally after Colonial Pipeline Co shut its main gasoline pipeline following an explosion in Alabama. Gasoline futures jumped 15 percent, then pared gains to 4.6 percent on news Colonial planned to reopen the line by Saturday. "Oil rode up at first on the Colonial pipeline news, but that effect has faded," said John Kilduff, partner at New York energy hedge fund Again Capital.
"All attention is back on Opec's failure thus far to put together a convincing production cut plan, and the possibility of higher US crude stocks from here." A month ago, the Organisation of the Petroleum Exporting Countries proposed its first production cut in eight years to reduce a global oil glut. By mid-October, Brent had hit one-year highs and WTI 15-month peaks as Opec kingpin Saudi Arabia talked up the plan, inviting non-member producers such as Russia to make cuts too.
In the past two weeks, crude prices have fallen as more Opec member said they were unwilling or unable to cut production, casting doubt on what the group will do when it meets on November 30 in Vienna. An Opec official document on Monday, indicating the group was making progress on the plan, did little to convince traders. "It looks like we will break down more momentously unless the Saudis intervene with big output cuts of their own," said David Thompson, executive vice-president at Powerhouse, a commodities-focused broker in Washington. Thompson sees WTI testing support next at $45.
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