Oil prices higher amid storm warnings in the Gulf of Mexico

“A decision (to freeze output) would be no more than lip service, as Russian Federation and Saudi Arabia are producing near their capacity limit”.

Futures decreased as much as 1.8 percent in NY after rising the previous two sessions.

Other big Middle Eastern producers, except Iran, also boosted output.

In New York, a barrel of West Texas Intermediate for October delivery fell 66 cents to close at US$46.98. The dollar was lifted greatly amid indications the Federal Reserve is gearing up to pursue an interest rate hike as early as September, in time for its next policy meeting.

Members of the Organization of Petroleum Exporting Countries and Russian Federation failed to agree at a meeting in Doha in April to limit production after Iran declined to attend and Saudi Arabia refused to proceed without all of the OPEC states participating. We also forecasted that the Brent-WTI differential would trade between $1.25 and $2.00 with respect to the October contract. This is after Saudi Arabia’s energy minister Khalid Al-Falih stated in the week prior that he does not trust any “significant intervention” in the oil market is needed.

The decline in revenue is strongly correlated with a drop in crude oil prices, which have fallen from $112 per barrel (b) in June 2014, to just $38/b in December 2015. Attention is now on the release of U.S. jobs data Friday – which should give an idea about the Fed’s plans for rates – before Russian Federation and OPEC hold talks in Algeria to discuss the oversupply crisis that has dented prices for years.

Analysts said they expected USA crude stockpiles rose 1.3 million barrels last week, the second straight weekly build, as the peak summer period for US driving and gasoline consumption winds down.

Brent crude was down 77 cents, or 1.5 percent, at $49.15 a barrel by 11:15 a.m. EDT (1515 GMT), nearly erasing gains from the previous two sessions. “There is the possibility that prices could drift lower”.

Oil prices were modestly higher during European hours on Tuesday, rebounding from overnight losses as market players continued to monitor a global supply glut.

Iraq, OPEC’s second-largest producer after Saudi Arabia, depends on oil sales for 95 percent of its public income.

Oil benchmarks were down across the board on Monday with the stronger United States dollar weighed heavily on the commodity and energy sectors.

But the current fundamentals are giving mixed signals on the direction of crude oil. The closures represent 11.5 per cent of oil output and 5.5 per cent of gas production. China doesn’t provide reliable oil demand statistics, so the broader economic data needs to be used as an indicator of underlying demand.