Oil prices were little changed on Tuesday as the market awaited weekly US inventory figures and as Kuwait and other Opec members joined top producers Saudi Arabia and Russia in support of prolonging supply cuts through March 2018 to reduce a global crude glut. Prices were down slightly in afternoon trade, but they have rebounded about 10 percent since hitting five-month lows 11 days ago.
Members of the Organization of Petroleum Exporting Countries have stated their intentions to keep supply cuts going through next year. The market had grown skeptical, as inventories have been drawing down slowly. US crude oil inventories were expected to fall by around 2.3 million barrels during the week ended May 12, according to a Reuters poll. That would be crude's sixth straight weekly decline after hitting a record high at the end of March.
"A big draw on crude might" lift prices, said Nauman Barakat, head of the energy desk at ADM Investor Services in New York. "But the upside is getting kind of exhausted." The American Petroleum Institute is scheduled to release data for last week at 4:30 pm EDT (2030 GMT) on Tuesday, with the US Energy Information Administration report due at 10:30 am EDT on Wednesday.
Brent futures fell 2 cents to $51.80 a barrel as of 1:54 pm EDT (1754 GMT). US crude lost 8 cents to $48.77 a barrel. Officials in Kuwait, Iraq, Iran and Venezuela voiced support for extending a crude output cut by Opec and other producing countries. The meeting to decide on the output cut extension has been set for May 25. Russian Energy Minister Alexander Novak said the proposed extension of output cuts aimed to bring global commercial oil inventories down to the five-year average and stabilize the market.
The International Energy Agency said the global oil market is rebalancing and the pace is picking up, even if inventories do not yet reflect the impact of Opec supply cuts.
James Woods, investment analyst at Rivkin Securities, said world oil supplies would probably remain plentiful, even if Opec extended the production cuts. He said "rising US production and record inventories have kept upside limited and a nine-month extension at this stage is unlikely to break that." Goldman Sachs said output would increase from Opec members that were exempt from the cuts. Also, US oil production is up more than 10 percent since mid-2016.