Oil futures finished higher Tuesday and logged their first gain in three sessions, buoyed by a report that major oil producers will consider deeper production cuts when they meet in December.
Members of the Organization of the Petroleum Exporting Countries and their allies will consider making further reductions to crude output when they meet in December because of growing concerns about a slowdown in growth for oil demand, Reuters reported Tuesday , citing sources from the oil-producing club.
“It looks like OPEC is confirming that they are going to do whatever it takes to support oil,” Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch.
The report also said OPEC member Saudi Arabia wants to first lift adherence to the agreement, as Iraq and Nigeria are among the countries that haven't fully complied with the reductions, the report said. Under the output-cut pact, which began at the start of this year and runs through March 2020, OPEC and its allies, known as OPEC+, agreed to cut production by 1.2 million barrels a day.
West Texas Intermediate crude for November delivery gained 85 cents, or 1.6%, to settle at $54.16 a barrel on the New York Mercantile Exchange, after falling 0.9% on Monday. The November contract, expired at Tuesday’s settlement. December WTI crude , the new front-month contract, settled at $54.48 a barrel, up 97 cents, or 1.8%.
Global benchmark Brent crude for December , meanwhile, added 74 cents, or 1.3%, to settle at $59.70 a barrel on the ICE Futures Europe exchange, following a 0.8% skid on a day earlier.
Crude-oil has been under pressure amid worries about global appetite for the commodity as economies inside and outside of the U.S. show signs of a slowdown. However, hope that the U.S. and China may strike a trade agreement soon has provided a tepid lift for crude prices.
President Trump on Monday said Sino-American trade negotiations were progressing well, and his top trade negotiator, Robert Lighthizer, suggested that a draft agreement could be forged at the Nov, 11-17 Asia-Pacific Economic Cooperation meeting in Santiago, Chile.
Looking ahead, traders also awaited fresh updates on weekly U.S. crude and product stockpiles.
Last week’s declines in U.S. petroleum-product supplies suggest that “demand isn’t as bad as the headline data might suggest,” Stephen Innes, Asia Pacific market strategist at AxiTrader, told MarketWatch.
There a “bit of a reflation trade happening as a number of analysts are pushing back the idea of a global slowdown is overblown,” he said.
The American Petroleum Institute will release its weekly inventory update at 4:30 p.m. Eastern time Tuesday, ahead of the U.S. Energy Information Administration due at 10:30 a.m. Wednesday.
“Despite all of the doom and gloom talk and the expectations of a big oil supply build, the whisper number on the street may actually give the market a surprise, when the American Petroleum Reports (API) releases its report tonight,” wrote Price Futures’ Flynn, in a daily research note.
“Despite low refinery runs and an expected build in the Cushing, Oklahoma delivery hub, sources are suggesting that we may get a big surge in U.S. oil exports and a drop in U.S. oil imports and could set the stage for a surprise crude oil draw,” he wrote.
On average, analysts polled by S&P Global Platts expect the EIA to report a rise of 4.7 million barrels in crude stockpiles for the week ended Oct. 18. The government agency has already reported five consecutive weekly increases in crude inventories.
The survey also showed expectations for supply declines of 2 million barrels for gasoline and 3 million barrels for distillates, which include heating oil.
November gasoline added 0.1% to $1.6089 a gallon and November heating oil tacked on 0.2% to $1.9437 a gallon.
November natural gas settled at $2.272 per million British thermal units, up 1.5%.