Oil prices recovered modestly from three-month lows on Tuesday, with concerns persisting about rising U.S. inventories and few clear signs that OPEC will extend supply curbs beyond June. The immediate focus for investors is Tuesday’s data from the American Petroleum Institute (API) about US crude and product stockpiles after a bigger-than-expected climb in last week’s report. Analysts see a further, albeit smaller, rise this time.
“Right now, the direction of travel is more important than the absolute level,” said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas, citing concerns that OPEC-led cuts lasting from January to June had not halted the build.
By 1052 GMT, Brent futures had risen 35 cents to $51.70 a barrel, after sliding on Monday to $50.85, their lowest level since Dec. 1. US crude rose 27 cents to $48.67 a barrel, after dipping in the previous session to $47.90, its lowest since November.
“This week is crucial to give us an idea of where prices will be for the rest of the year – all eyes will be on API data later, and a sniff of another big crude build and down we go towards $45,” said Matt Stanley, commodities broker at Freight Investor Services.
Investors will also be watching OPEC’s monthly report to be released on Tuesday, followed by a report from the International Energy Agency on global supply and demand on Wednesday.
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Crude prices have erased most of the gains made since the Organization of the Petroleum Exporting Countries announced supply curbs on Nov. 30, followed in December by an announcement that a number of non-OPEC producers would join the cuts.
OPEC has said the supply cuts aim to stabilise prices and draw down global inventories. Investors are now looking for indications that OPEC will extend its reductions beyond June.
Saudi ally Kuwait said on Monday it would support an extension of the global deal.
“It will speed up rebalancing of the market and will help bring prices to acceptable levels for oil-producing nations and the industry in general,” the Gulf state’s oil minister, Essam al-Marzouq, told the state news agency.
But Saudi Arabia, the world’s biggest oil exporter and which has cut even more production than it had pledged in the OPEC deal, has yet to indicate clearly whether it is ready to extend.