LONDON (Reuters) – Oil slipped to around $61 a barrel on Tuesday, falling for a second day, pressured by expectations of a rise in U.S. crude inventories and doubts that OPEC and its allies will cut oil output further in December.
An oil pumpjack is seen in La Canada de Urdaneta, Venezuela October 1, 2019. Picture taken October 1, 2019. REUTERS/Jose Nunez
U.S. crude inventories are seen around 700,000 barrels higher in weekly supply reports, the first of which is due at 2030 GMT from the American Petroleum Institute.
Russia’s deputy energy minister said it was too early to talk of deeper output cuts by OPEC and its allies.
Brent crude LCOc1 was down 60 cents at $60.97 a barrel at 1136 GMT, having fallen 45 cents on Monday. U.S. West Texas Intermediate CLc1 crude fell 72 cents to $55.09.
“Doubts about OPEC+” are weighing on prices, said Commerzbank analyst Carsten Fritsch, referring to the future of a supply-cutting pact between the Organization of the Petroleum Exporting Countries and other nations including Russia.
Brent has gained 13% in 2019, supported by the OPEC+ deal, which for now calls for a supply cut of 1.2 million barrels per day until March. The producers meet on Dec. 5-6 to decide whether to extend or adjust the pact.
While OPEC officials have said a deeper supply cut is an option, news agency TASS on Monday cited Russian Deputy Energy Minister Pavel Sorokin as saying such talk was premature.
Last week, Brent rose more than 4%, supported by a drop in U.S. inventories and signs of an easing in the U.S.-China trade dispute. Hopes of progress are now fading, some analysts said.
“A cautious market sentiment remains in place, with optimism from last week’s progress on a China-U.S. trade deal ebbing away,” JBC Energy said in a report.
The U.S. Federal Reserve is expected to reduce interest rates when it concludes its two-day meeting on Wednesday. Investors will be watching for any indication that further cuts are likely. GRAPHIC: U.S. crude inventories, weekly changes since 2017, click tmsnrt.rs/2XlX17b
“Brent found resistance around $62 but that may prove temporary if trade headlines continue to improve and central banks keep slashing interest rates,” said Craig Erlam, an analyst at broker OANDA.
BP Chief Financial Officer Brian Gilvary was cautious on the outlook for prices, telling Reuters on Tuesday Brent was “finely balanced” at around $60 with more downside than upside risk after BP reported a fall in profit.
After the API report, attention will focus on official inventory figures from the Energy Information Administration due on Wednesday. [API/S]
Additional reporting by Aaron Sheldrick; Editing by Mark Potter and Dale Hudson
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