By Geoffrey Smith 

Investing.com — Crude oil prices slipped in early trading in New York on Tuesday, but remained largely in a holding pattern ahead of the week’s two updates on U.S. inventories and an OPEC+ meeting on Wednesday to review the effectiveness of the group’s output restraint deal.

By 9:10 AM ET (1310 GMT), futures were down 1.5% at $42.23 a barrel, while futures were down 1.1% at $44.88 a barrel.

were down 1% at $1.2596 a gallon.

Prices failed to respond markedly to the only U.S. economic data of the day, a much sharper-than-expected rise in housing starts and building permits that analysts say reflects how the pandemic has driven a boom in demand for housing in less densely populated locations.

Brent has been trading for weeks within a narrowing channel whose bottom line is the 50-day moving average and whose top line is the 200-day one. That channel is now closing fast, suggesting a breakout in one direction or other is increasingly likely, noted Ole Hansen, an analyst with Saxo Bank, via Twitter.

However, with neither the OPEC+ meeting, nor Wednesday’s release of the minutes from the Federal Reserve’s last policy meeting likely to “rock the boat”, Hansen said it was still impossible to tell which direction the breakout would go.

At 4:30 PM ET (1830 GMT), the American Petroleum Institute will release its weekly update on the country’s inventories, with analysts forecasting a draw of just under 2.5 million barrels from crude stockpiles.

That would be the third straight weekly draw and the fourth in five weeks, consistent with a U.S. economic recovery that is still on track, after a clear drop in new coronavirus cases across the south and west in the last couple of weeks.

However, it would also show the decline in stockpiles slowing from earlier in the summer. There are also continuing signs around the world of the virus’ enduring potential to hit demand: South Korea, which imports over 2.5 million barrels a day in normal times, said earlier on Tuesday it will tighten lockdown measures again in response to a flareup of the coronavirus, while in India – another major importer struggling to contain the virus – Bloomberg reported that diesel sales have fallen 20% in the first half in August from the same period a month earlier.

“The market is flooded with oil in storage and the current balance of supply and demand is not likely to create sizeable draws of stored crude very soon,” said Rystad Energy’s head of oil market research Bjornar Tonhaugen in emailed comments.

Tonhaugen noted that the current range around $45 for Brent is “a no man’s land” – neither high enough to incentivize new long-term projects, nor low enough to prohibit short-cycle ones.