SINGAPORE (Reuters) – Oil gained on Tuesday as producer club OPEC agreed to extend supply cuts until next March, although prices were pressured by worries demand could ease amid hints of a slowdown in the global economy.
FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer
Brent crude futures LCoc1 for September delivery were trading up 17 cents, or 0.3%, at $65.23 a barrel by 0706 GMT, after earlier falling to $64.66.
U.S. crude futures for August CLc1 were up 9 cents at $59.18 a barrel, after touching their highest in over five weeks on Monday.
“(OPEC) sticking to their production curbs … will continue to support oil prices as it remains the primary mechanism for the delicate task of keeping the market equilibrium intact,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
The Organization of the Petroleum Exporting Countries (OPEC) agreed on Monday to extend oil supply cuts until March 2020 as the group’s members overcame their differences to try to prop up the price of crude.
OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging U.S. output.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts until December 2019 or March 2020.
Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector felt the impact of a contaminated crude crisis that crippled exports.
Meanwhile, U.S. crude oil stockpiles were seen falling for a third consecutive week, a preliminary Reuters poll showed on Monday, also supporting prices.
“With back-to-back weekly inventory draws, I think we are starting to see some strategic buying thinking we will get another draw,” Innes added.
While U.S. producers hit a monthly record of 12.16 million barrels per day (bpd) in April, according to data, new U.S. shale oil production is expected to slip this year from last year, according to a survey of major forecasters.
Still, concerns of a weaker global economy denting oil demand capped price gains.
While the U.S. and China agreed at a recent Group of 20 leaders summit to restart trade talks, indications that factory activity shrank across much of Europe and Asia in June while growth in manufacturing cooled in the United States weighed on oil prices.
“Oil traders will now turn their attention to the economic data, as the weakening global activity and waning demand could again weigh on the sentiment and call for a downside correction in oil prices following the June rebound,” Ipek Ozkardeskaya, senior market analyst at London Capital Group, said in a note.
Reporting by Jessica Jaganathan; Editing by Joseph Radford and Richard Pullin