U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading steady on Tuesday as concerns over rising U.S.-China tensions remained at the forefront and as traders assessed the probability of OPEC and Russia agreeing to a new deal to extend output cuts.
In other news, the markets are being underpinned by a drop in crude stockpiles at Cushing, Oklahoma, which fell to 54.3 million barrels in the week to May 29, traders said, citing a Genscape report on Monday.
OPEC+ to Hold Virtual Meeting Later This Week
OPEC+ producers are considering extending their output cut of 9.7 million barrels per day (bpd), about 10% of global production, into July or August, at an online meeting likely to be held on June 4, Reuters reported.
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 been leading talks to push for extending the heftier cuts, sources told Reuters last week.
American Petroleum Institute to Report Weekly Inventories Late Tuesday
At 20:30 GMT, the API is expected to release its weekly inventories report. Last week, oil prices fell after the API reported a large crude oil inventory build of 8.731 million barrels for the week-ending May 22.
The API also reported a build of 1.120 million barrels of gasoline for the week-ending May 22. Distillate inventories were up by 6.907 million barrels for the week. Cushing inventories saw a draw of 3.370 million barrels.
Baker Hughes Rig Count Reaches Record Low
The number of operating U.S. oil and gas rigs as counted by Baker Hughes plunged for the 12th consecutive week to a new low of 301. The lowest number during the 2014-2016 oil bust was 404 in May 2016, and until this collapse was the lowest number ever recorded.
The limited range and the light volume suggest many of the major players are sitting on their hands ahead of the OPEC meeting although we could see the return of volatility with the release of the API data late Tuesday and the U.S. Energy Information Administration weekly inventories report on Wednesday.
Russia is likely to be the key obstacle in any extension. Furthermore, they are unlikely to agree to an extension which goes beyond two months. So most likely, we’re going to see a new OPEC+ deal before the end of the week that extends the production cuts until September 1.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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