Oil prices held near the $50-level in European trade on Tuesday, as market participants looked ahead to a key meeting of major oil producers later this week.
The Organization of the Petroleum Exporting Countries will meet on Thursday in Vienna although no dramatic announcement on a production cut is expected.
The oil cartel’s most recent meeting in Qatar in April ended without agreement to freeze output at current levels due to Saudi Arabia’s insistence that Iran be part of the agreement.
On the ICE Futures Exchange in London, Brent oil for August delivery dipped 31 cents, or 0.62%, to trade at $50.05 a barrel by 07:58GMT, or 3:58AM ET, as market players focused on an improving global supply outlook.
According to reports, Iraq plans to ship 5 million extra barrels of crude in June. Saudi Arabia, Kuwait, Iran and the United Arab Emirates are also planning to increase supplies later this year.
Last Thursday, Brent prices jumped to $50.96, a level not seen since October 12, as unplanned supply disruptions in Nigeria eased concerns over a global glut.
Brent futures prices are up by roughly 85% since briefly dropping below $30 a barrel in mid-February.
Elsewhere, crude oil for July delivery on the New York Mercantile Exchange inched up 14 cents, or 0.28%, to trade at $49.47 a barrel, lifted by the start of the peak demand summer driving season in the U.S.
Nymex prices rallied to $50.21 last Thursday, the most since October 9. U.S. crude futures are up nearly 80% since falling to 13-year lows at $26.05 on February 11 as a decline in U.S. shale production boosted sentiment.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. fell by two to 316 in the latest reporting week, keeping up a broad trend of declines.
According to AFP, US crude rose in Asia Tuesday as investors awaited manufacturing data from China and before an OPEC meeting on production caps this week.
Dealers expect Chinese manufacturing data due on Wednesday to set the tone at mid-week, with volumes thin after US and UK financial markets closed for a public holiday.
China is the world’s largest energy consumer so any indication of how its economy is performing acts as a key driver for oil prices.
“If the number is positive, it should help in prices as China is one of the drivers for the commodity,” CMC Markets trader Alex Wijaya told AFP.
“Major markets were closed yesterday so there wasn’t much of a driver for prices. Today should be pretty quiet as well.”
Oil prices dipped on Monday after comments from the US central bank head Janet Yellen suggested interest rates could rise soon if the world’s top economy continues to improve.
The expectation of a US rate hike pushed up the greenback, hurting dollar-denominated oil by making it more expensive for buyers with weaker currencies and denting demand.
But WTI managed to eek out gains on Tuesday ahead of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on June 2.
Gatherings of some of the world’s biggest producers are always closely watched by oil traders, but few are expecting a deal to cap production will be reached after similar efforts failed in April.
Iran, a key member of OPEC, has said it has no plans to join any output freeze by other major crude producers after returning to world oil markets in January with the lifting of Western sanctions.
“I think the general sentiment is that traders do not have much expectations for an OPEC agreement,” Wijaya said.
“Given all the major developments so far, traders are not expecting any major surprises.”
Crude prices briefly topped the psychological $50 a barrel last week for the first time this year as production disruptions in Canada and Nigeria eased short-term concerns about abundant global supplies.
But prices remain less than half of their 2014 peaks due to a glut of world supplies that experts predict could last for years.,
Source: News Agencies, 31 May 2016