Oil steadies as Riyadh pushes for further supply cuts

Oil steadies as Riyadh pushes for further supply cuts

Oil steadies as Riyadh pushes for further supply cuts

That came after USA crude inventories were reported to have fallen and before the OPEC+ meeting later this week.

Oil prices rose on Tuesday on expectations for OPEC+ to enact the deeper cuts for a longer period.

Crude has climbed since early October on signs the USA and China were edging closer to an initial trade deal.

U.S. crude inventories are expected to have declined last week, which may support prices, with analysts in a preliminary Reuters poll suggesting a contraction of 1.8 million barrels. That would be the biggest decline since September if confirmed by Energy Information Administration figures due Wednesday.

In November, both countries were showing indications for a possible signing of the "phase one" trade deal but on Tuesday, Donald Trump hinted that the deal will have to wait after the presidential election in November 2020 and that brought some chill on investors heart thereby weakening their appetite.

Goldman Sachs analysts said OPEC+ was likely to extend output curbs until June, but said three extra months would provide little support for prices, which they expect to trade around $60 in 2020.

OPEC's ministers will meet in Vienna on December 5 and the wider OPEC+ group will meet on December 6.

U.S. West Texas Intermediate (WTI) crude CLc1 futures were up by 31 cents, or 0.6%, at $56.41.

Worldwide benchmark Brent crude was trading at $61.28 per barrel at 0623 GMT on Wednesday for a 0.13% gain after it closed Tuesday at $61.20 a barrel.

Analysts surveyed by Bloomberg expect the EIA - which will release data later Wednesday - to report a 1.5-million barrel decline in USA crude inventories, according to the median estimate. That would be the first drop in six weeks.

When oil ministers from OPEC oil producers begin their meeting on Thursday, analysts and traders will be looking for an extension of the cartel's current production cuts, or even better, further cuts to production as a path to higher crude prices. Prices have fluctuated throughout the year, reaching almost $75 per barrel in April after U.S. sanctions on Iran and Venezuela limited world supply, but lingering trade tensions between the United States and China dampened economic expectations, pushing prices back down.

"There's a lot of uncertainties out there, not least the US shale outlook, strength in demand, the overall economic outlook, all the rest of it, that more likely than not they will leave it in place and meet again in March", Atkinson said.

-With assistance from James Thornhill. All comments are subject to editorial review.

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