CVX Chevron Corporation

By Dan Molinski and Sarah McFarlane 

-- U.S. oil prices declined slightly Tuesday, sticking to a narrow trading range as stock markets moved sideways and investors awaited weekly government data on U.S. oil inventories.

-- West Texas Intermediate futures, the U.S. oil standard, ended 0.1% lower at $56.56 a barrel on the New York Mercantile Exchange.

-- Brent crude, the global oil benchmark, closed 0.3% higher at $65.86 a barrel on London's Intercontinental Exchange.

HIGHLIGHTS

Close Quarters: WTI has been trading in a tight range roughly between $55 and $57 a barrel for the past two weeks, and prices remained hemmed inside that band most of the session on Tuesday. "The complex remains in a consolidation phase and while today's push to above yesterday's $57 highs per nearby WTI offered some solace to the bulls, upside follow through will likely require a decided bullish surprise out of tomorrow's EIA report," said analysts at Ritterbusch & Associates in a research note, referring to the U.S. Energy Information Administration's weekly petroleum status report.

Last week's EIA data provided just such a surprise, as the administration reported a large and unexpected 8.6-million-barrel decline in U.S. oil inventories for the previous week. But price gains after that report stalled out quickly, leading some analysts to question whether prices may soon fall back toward $50 a barrel.

This week's EIA report is due Wednesday morning, and a survey by The Wall Street Journal indicates crude stockpiles may have risen by 1.6 million barrels last week.

The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 7.3-million-barrel increase in crude supplies, a 391,000-barrel fall in gasoline stocks and a 3.1-million-barrel decrease in distillate inventories, according to a market participant.

China Slowdown: Oil prices had turned lower during the overnight session after the world's second-largest economy cut its 2019 economic growth target to between 6% and 6.5% on Tuesday, lower than the 6.6% it achieved last year, causing concern over the outlook for Chinese oil demand. "The Chinese figures do matter, the market is strongly focused on Chinese demand expectations," said Hans van Cleef, energy economist at ABN Amro. While this was negative for oil prices, a more supportive development has been the progress toward a trade deal between the U.S. and China after months of tension, Mr. van Cleef added. China and the U.S. are in the final stages of completing a deal.

INSIGHT

Permian Push: Chevron Corp. and Exxon Mobil Corp. plan to significantly ramp up production in the Permian oil field of Texas and New Mexico that lies at the heart of the American fracking boom. Exxon said Tuesday it would increase its Permian output to one million barrels of oil and gas a day by as early as 2024, while Chevron expects to more than double its Permian production to 900,000 barrels of oil and gas a day in the next five years.

"Both Exxon and Chevron are trying to one-up each other over how fast they intend to grow there," said Stewart Glickman, energy equity analyst at CFRA Research. "Why is this hard-baked patch of earth relevant? Because the Permian Basin is on the verge of hitting 4.0 million barrels of oil per day in supply, which, if it were a country and part of the OPEC-Plus Consortium, would rank fourth in size, after Saudi Arabia, Russia and Iraq."

AHEAD

-- The EIA releases its weekly petroleum status report at 10:30 a.m. ET Wednesday.

-- Baker Hughes releases its weekly rig count on Friday.

Bradley Olson contributed to this article.

Write to Dan Molinski at Dan.Molinski@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com

(END) Dow Jones Newswires

March 05, 2019 17:05 ET (22:05 GMT)

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