Oil steadied after the biggest loss in more than a week as OPEC’s hints at extending output cuts fanned optimism and investors anticipated a drop in US stockpiles.
Futures in New York were little changed after losing 1.7 percent. Kuwait said the Organization of Petroleum Exporting Countries and allied producers will discuss prolonging an agreement to curb oil output into 2019. Meanwhile, a Bloomberg survey showed US crude inventories probably fell last week after holding below the five-year average over the previous month.
Oil surged to a three-year high last week as geopolitical risks including the conflict in Syria and tensions between Saudi Arabia and Iran-backed rebels in Yemen raised concerns over potential supply disruptions in the Middle East. However, record US crude production remains a major worry for OPEC and its partners, who have been battling to clear a global glut by reducing output for the past 15 months.
“OPEC and its allies are expected to control their supplies at levels that meet demand even after crude inventories decline,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. Additionally, “declining US crude inventories should support oil prices.” West Texas Intermediate for May delivery slipped 37 cents to $65.85 a barrel on the New York Mercantile Exchange at 8:52 a.m. local time, after gaining as much as 53 cents earlier. The contract dropped $1.17 to $66.22. Total volume traded on Tuesday was in line with the 100-day average.
Brent for June settlement fell 37 cents to $71.05 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.18 premium to June WTI. Yuan-denominated futures for September delivery slid 0.7 percent to 425.1 yuan a barrel on the Shanghai International Energy Exchange, after gaining 0.4 percent.
OPEC and allied producers including Russia will consider maintaining their production limits beyond the end of the year when they meet in June to assess the market, Kuwait Oil Minister Bakheet Al-Rashidi said. Russia said this month the alliance could last “indefinitely.”
In the US, crude stockpiles probably fell by 600,000 barrels last week, according to the median estimate in the Bloomberg survey before government data due on Wednesday. Nationwide inventories dropped below the five-year average last month for the first time since 2014. Stocks in Cushing, Oklahoma, the delivery point for WTI futures, probably shrank by 650,000 barrels last week after rising for five weeks through April 6.
China’s crude processing rose to a record on a daily basis in March as refining giants increased activity after the Lunar New Year holidays, according to data released by the National Bureau of Statistics on Tuesday. Brent will climb near $80 a barrel if US President Donald Trump reimposes sanctions on Iran, said Abhishek Deshpande, JPMorgan Chase & Co.’s head of oil-market
research and strategy.