Oil steadied after the biggest loss in more than a week as OPEC’s hints at extending output cuts fanned optimism and investors anticipated a drop in U.S. stockpiles.
Futures in New York were little changed after losing 1.7 percent on Monday. Kuwait said the Organization of Petroleum Exporting Countries and allied producers will discuss extending an agreement to cut oil output into 2019. Adding to the optimism was a survey of analysts by Bloomberg that forecast U.S. crude inventories probably fell last week after holding below the five-year average over the previous month.
Oil surged to a three-year high last week after geopolitical risks including the conflict in Syria and tensions between Saudi Arabia and Iran-backed rebels in Yemen raised concerns over potential supply disruptions in the Middle East. However, record U.S. crude production remains a major worry for OPEC and its allies, who have been battling to reduce a global glut by curbing supply for the last 15 months.
“OPEC and its allies are expected to control their supplies at levels that meet demand even after crude inventories decline,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. Additionally, “declining U.S. crude inventories should support oil prices.”
West Texas Intermediate for May delivery rose 3 cents to $66.25 a barrel on the New York Mercantile Exchange at 9:44 a.m. in London, after gaining as much as 53 cents. The contract dropped $1.17 to $66.22 on Monday. Total volume traded was about 15 percent higher than the 100-day average.
Brent for June settlement added 2 cents to $71.44 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.21 premium to June WTI.
Yuan-denominated futures for September delivery slipped 0.7 percent to 425.1 yuan a barrel on the Shanghai International Energy Exchange, after gaining 0.4 percent on Monday.
OPEC and allied producers including Russia will consider continuing the global production limits beyond the end of the year when they meet in June to assess the market, Kuwait Oil Minister Bakheet Al-Rashidi said. Russia, which leads the group with Saudi Arabia, said this month the alliance could last “ indefinitely.”
In the U.S., crude stockpiles probably fell 600,000 barrels last week, according to the median estimate in the Bloomberg survey before government data due Wednesday. Nationwide inventories fell below the five-year average last month for the first time since 2014. Stocks in Cushing, Oklahoma, the delivery point for WTI futures, probably decreased 650,000 barrels last week after rising for five weeks through April 6. — Bloomberg

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