Oil prices steadied on Tuesday, weighed by concerns about a global economic slowdown that could dent crude demand, but supported by expectations that OPEC and its allies will extend their supply curbs.
Oil pumps are seen after sunset outside Vaudoy-en-Brie, near Paris, France November 14, 2018.
Brent crude futures rose 2.7%, to $63.33 a barrel, while U.S. West Texas Intermediate crude futures also rose 2.7%, to $53.99/Bbl. Yet crude has since dropped more than 10% as the U.S.
On the demand side, analysts expect fuel consumption growth to stutter along with the global economy.
"The energy complex has managed to largely reconnect with the equities this week but we are viewing this renewed correlation as tenuous given some increasingly bearish technical indicators spread across the oil spectrum", Jim Ritterbusch of Ritterbusch and Associates said in a note. -China trade tensions continued to threaten demand for crude and as major producers Saudi Arabia and Russian Federation had yet to agree on extending an output-cutting deal.
"Indeed, comments from Novak yesterday that Russian Federation is anxious about oversupply and potentially $40/bbl oil in the second half of the year has further strengthened our view that OPEC+ will agree on an extension to their production cuts".
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Earlier, Russian Finance Minister Anton Siluanov said that the price of oil could drop to $30 a barrel if OPEC and its partners fail to agree on extending the production cuts that now expire at the end of June.
"We need to continue to monitor the situation and see what happens in June so we can take a balanced decision in July", says Energy Minister Novak.
"With the Mexican stalemate averted and no harmful shockwaves from this weekend G-20 meeting. oil could trade favorably as WTI and Brent will continue to track the broader risk environment high", Innes said.
The Organisation of the Petroleum Exporting Countries (OPEC) and some allies including Russian Federation, known collectively as OPEC+, have been withholding supplies since the start of the year to prop up prices. Oil output in the first three days of June was the lowest since mid-2016, according to Reuters calculations. The EIA forecasts 2019 domestic crude production of 12.32 million barrels a day, down 1% from the May forecast, while cutting its 2020 output view by 0.9% to 13.26 million barrels a day.
Market participants await industry data on US crude stockpiles, due out at 4:30 p.m. EDT (2030 GMT), that is expected to show inventories fell 500,000 barrels last week from almost two-year highs.
More data is due for release this week.