Oil prices rise as OPEC is seen rebuffing pressure from Trump
Oil edged up on Tuesday as OPEC was expected to stick to its production cuts despite pressure from U.S. President Donald Trump, although the prospect of higher Libyan output capped gains.
Prices slid on Monday, when many traders were out of the office attending International Petroleum Week, a series of industry events in London, after Trump called on OPEC to ease its efforts to boost the oil market. Prices were “getting too high,” the president said.
“Yesterday was a typical price action you see during IP Week when you have a headline,” said Olivier Jakob, oil analyst at Petromatrix. “But I don’t think it will change anything in current OPEC supply policy.”
Brent crude, the global benchmark, rose 64 cents, or 1 percent, to $65.40 around 11:55 p.m. ET (1655 GMT), after losing 3.5 percent on Monday. U.S. West Texas Intermediate crude rose 35 cents to $55.83, after a roughly 3-percent fall.
The chance of more oil from Libya and expectations of higher U.S. crude inventories limited the rally.
Libya’s internationally recognized government agreed with the state oil company to reopen the country’s largest oilfield, El Sharara, according to a statement on Tuesday.
U.S. crude stocks were seen 3.6 million barrels higher in weekly inventory reports. The first such report is due at 4:30 p.m. ET (2130 GMT) from the American Petroleum Institute., following by more comprehensive government figures on Wednesday morning.
Oil is up about 20 percent since the start of the year, when OPEC and non-member producers, such as Russia, began cutting production in an effort to reduce a global glut.
Saudi Arabia and other OPEC members are likely to be cautious about relaxing their supply-cut plan, Jakob said, after a boost in output in the second half of last year ahead of U.S. sanctions on Iran led to a steep slide in prices.
Oil broker PVM took a similar view.
“Will the kingdom budge and increase production or at least keep it steady,” said PVM’s Tamas Varga. “Just two weeks after announcing deeper cuts, it would be a capitulation.”
An OPEC source, in comments to Reuters on Tuesday, agreed with the analysts’ views.
U.S. sanctions against OPEC members Iran and Venezuela have also contributed to the gains and are providing a floor for prices, analysts say.
Optimism about a U.S.-China trade deal also helped prices to rally.
Trump on Monday said he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences.
— CNBC’s Tom DiChristopher contributed to this report.