Oil dips on doubts over output cuts, crude glut woes

Oil edged lower on Tuesday on uncertainty over whether the world's biggest producers would agree to cut output in the face of a swelling crude oil glut as fuel demand has been hammered during the coronavirus pandemic.
Brent crude fell 12 cents to $32.93 a barrel by 1:13 p.m. EDT (1713 GMT), while West Texas Intermediate (WTI) crude lost 35 cents to $25.73 a barrel.
"The market is indicating that it wants some more certainty on whether the Russians and Saudis will strike a deal to limit supply," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
"You're also seeing pressure coming in from the fact that the market is expecting another week of sizable inventory gains here in the US," he said.
The top global suppliers of crude, including Saudi Arabia and Russia, plan to meet on Thursday to discuss reducing output, but several energy ministers have said they will do so only if the United States joins in with its own cuts, sources told Reuters.
On Tuesday, the US Department of Energy, noting new monthly forecasts, pointed out that production is already dropping without government involvement.
Any final agreement on how much the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will curb output would depend on volumes that producers such as the United States, Canada and Brazil are willing to cut, an OPEC source said on Tuesday.
Prices are likely to remain low due to a global recession that the latest survey of economists in a Reuters poll suggested will be more serious than was expected a few weeks ago.
OPEC+, which includes Russia, had been curtailing production in recent years even as US producers ramped up their output to make the country the world's biggest crude producer.
US President Donald Trump on Monday said OPEC had not asked him to push domestic oil producers to cut production to buttress prices. He also said US output was already declining in response to falling prices.
Coordinated action by US oil producers would typically be a violation of antitrust laws.
Worldwide oil demand has dropped by as much as 30% this year, coinciding with moves by Saudi Arabia and Russia to flood markets with extra supply after a previous output deal fell apart.
"With 28 million bpd of oversupply in the oil market in April and 21 million bpd in May, the global coordinated production cuts that are really needed may be too large for the producers to accept; perhaps twice as large as the numbers being discussed," said Rystad Energy's Bjornar Tonhaugen.