Oil rises on talk of more OPEC cuts, demand concerns linger

Business

LONDON (Reuters) – Oil prices edged higher on Tuesday as expectations for major producers to further curtail output offset lingering concerns over global demand and rising U.S. production.

FILE PHOTO: A view of an oil refinery off the coast of Singapore March 14, 2008. REUTERS/Vivek Prakash

Brent crude futures LCOc1 were up 8 cents, or 0.14%, from the previous settlement at $58.65 a barrel at 1032 GMT. The international benchmark has lost more than 20% since hitting its 2019 high in April.

U.S. West Texas Intermediate (WTI) CLc1 futures were at $55.02 per barrel, up 9 cents, or 0.1%.

Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries, said last week it planned to keep its crude exports below 7 million barrels a day in August and September to help drain global oil inventories.

The kingdom’s plan to float its national oil company Saudi Aramco in what could be the world’s largest initial public offering (IPO) gives it further impetus to boost prices.

“With Saudi Aramco reportedly eyeing an IPO once again, there is some support to the idea that Saudi Arabia has a heightened interest in strong crude prices and will cut its own output accordingly,” Vienna-based consultancy JBC Energy said.

OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) of production since Jan. 1.

A deepening trade war between the United States and China, the world’s two largest economies and energy consumers, has weighed heavily on oil prices in recent months.

China’s central bank lowered its official yuan midpoint for the ninth straight day to a fresh 11-year low on Tuesday. A weaker yuan raises the cost of dollar-denominated oil imports into China, the world’s biggest crude oil importer.

Booming U.S. shale oil output continued to chip away at efforts to limit the global supply overhang, weighing on prices.

U.S. oil output from seven major shale formations is expected to rise by 85,000 bpd in September to a record 8.77 million bpd, the Energy Information Administration forecast in a report.

“Though this would be a somewhat steeper rise than in the previous months, it would still be significantly smaller than a year ago, when shale oil production was growing by nearly 250,000 barrels per day,” Commerzbank analyst Carsten Fritsch said in a note.

The start-up of a major pipeline between the Permian shale basin and the Gulf Coast means that more crude can be exported, adding to global supplies.

Additional reporting by Roslan Khasawneh; Editing by Jan Harvey and Mark Potter

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