MELBOURNE: Oil prices rose in early trade on Tuesday, with traders waiting to see whether major crude producers agree to extend their huge output cuts to shore up prices at a meeting expected later this week.
Brent crude futures rose 0.3%, or 12 cents, to $38.44 a barrel as of 0011 GMT.
U.S. West Texas Intermediate (WTI) crude futures traded in a 38 cent range on either side of Monday's close, and last traded up 0.3%, or 9 cents, at $35.53 a barrel.
Brent prices have doubled over the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and allies, including Russia, dubbed OPEC+. However, prices are still down about 40% for the year so far.
OPEC+ producers are considering extending their production cut of 9.7 million barrels per day (bpd), or about 10% of global output, into July or August, at an online meeting likely on June 4, which has helped prop up prices this week.
"So long as the current OPEC+ compliance commitment argument for price recovery holds water, oil prices could stabilise at higher ranges," said Stephen Innes, chief global market strategist at AxiCorp.
Under the OPEC+ plan agreed in April, the record supply cut was to be for May and June, scaling back to a cut of 7.7 million bpd from July through December. Saudi Arabia has led talks pushing to extend the heftier cuts.
A drop in crude stockpiles at Cushing, Oklahoma, which fell to 54.3 million barrels in the week to May 29, also buoyed prices, traders said, citing a Genscape report on Monday.
However trade tension between China and the United States over Beijing's security clampdown in Hong Kong, as well as manufacturing data on Monday showing Asian and European factories struggling, kept a lid on gains. - Reuters
Oil steady; US-China tensions weigh, possible output cuts support
NEW YORK:Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from reports that OPEC and Russia were close to a deal extending output cuts.
Brent futures rose 48 cents, or 1.3%, to settle at $38.32 a barrel. U.S. crude fell 5 cents, or 0.1%, to settle at $35.44 a barrel.
Prices found support after news that the Organization of the Petroleum Exporting Countries and Russia, known as OPEC+, were moving closer to a compromise on extending oil output cuts and were discussing rolling over the curbs one to two months.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10.
Stockpiles at Cushing, Oklahoma, fell to 54.3 million barrels in the week to May 29, traders said, citing a Genscape report on Monday.
Bank of America said Monday it believed that North American oil shut-ins peaked in May.
"Oil prices have strengthened to levels where shutting-in no longer makes sense and should actually encourage producers to quickly restore production," according to a BofA Global Research report.
Investors have turned more cautious, however, after China warned of retaliation on U.S. moves over Hong Kong.
China has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special U.S. treatment for Hong Kong to punish Beijing.
"The possibility of heightened tensions does pose a risk for the recent rally in oil prices," said Harry Tchilinguirian, head of commodity research at BNP Paribas.
Economic concerns and questions about fuel demand recovery also weighed on oil futures. Manufacturing data on Monday showed that Asian and European factories were struggling as government-imposed lockdowns tempered demand. - Reuters
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