Oil steadies as demand concerns counter OPEC cuts
Market participants were also awaiting further direction from weekly data on U.S. crude stockpiles, which analysts expect to show a 500,000-barrel drawdown last week from nearly two-year highs.
Industry data from the American Petroleum Institute is due out at 4:30 p.m. EDT (2030 GMT), followed by government’s report is due on Wednesday.
Brent crude futures settled unchanged at $62.29 a barrel, while U.S. West Texas Intermediate (WTI) crude futures edged up 1 cent to end at $53.27 a barrel.
Both Brent and WTI are down roughly 20% from their 2019 peak reached in April. Concern about slowing demand and economic growth has had a large impact on sentiment amid a trade war between the United States and China.
The U.S. Energy Information Administration cut its 2019 world oil demand growth forecast by 160,000 barrels per day to 1.22 million bpd.
“The demand outlook is central to the oil market these days,” said John Kilduff, an analyst at Again Capital LLC. “The global economic data has been chock full of negative surprises, of late, attributable to the fallout from the U.S.-China trade war.”
However, Beijing said it will allow local governments to use proceeds from special bonds as capital for major investment projects, in a bid to support the slowing economy amid an escalating trade war with the United States.
Supporting oil prices on Tuesday was optimism that the Organization of the Petroleum Exporting Countries and other producers such as Russia would extend an output cut deal that has been in place since the beginning of the year to prop up prices. The group, known as OPEC+, is due to meet in late June or early July to decide whether to extend the pact.
Russian energy minister Alexander Novak said on Monday there is still a risk that oil producers pump out too much crude and prices fall sharply, suggesting Moscow might support an extension. The comments, along with remarks from Saudi Arabia, bolstered expectations the deal will be renewed.
Russia’s average oil output stood at 11.04 million bpd on June 1-10, up from an average of 10.87 million bpd on June 1-3, two sources familiar with official data said on Tuesday. Oil output in the first three days of June was the lowest since mid-2016, according to Reuters calculations.
Source: Reuters (Stephanie Kelly; Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; editing by Emelia Sithole-Matarise and Marguerita Choy)