Crude oil is trading quietly on Tuesday. In the North American session, U.S. West Texas Intermediate crude oil futures is trading at $53.94, up $0.38, or 0.72% on the day. Brent crude futures are trading at $59.88, down $0.01, or 0.02%.
Russia Fails to Cut Oil Production
Oil prices dipped on Monday, after Russia announced that it had not met a commitment to reduce oil production in September. The official explanation was an increase in natural-gas condensate production ahead of the winter months. Analysts are skeptical that Russia, the world’s second-largest oil producer, will adhere to the reduction agreement in October, which could put downward pressure on oil prices. Another factor which could push crude prices lower was the announcement that Kuwait and Saudi Arabia plan to open two dormant oil fields which they manage jointly. This could add up to 500,000 barrels of crude per day. OPEC’s current agreement, which runs until March 2020, calls for daily cuts of 1.2 million barrels a day.
Investors Eye Trade Talks
With China gripped in an economic slowdown, the U.S-China trade talks could prove critical to boosting world growth, and with it the demand for crude oil. China’s GDP dipped to 6.0% in the third quarter, and the downward trend is expected to continue if the impasse between the world’s two largest economies continues. The sides are focusing on reaching a limited trade agreement (“phase 1”), and a breakthrough in the talks could send oil prices higher.
Ahead – EIA Crude Inventories
Crude prices have been under downward pressure due to continuing surpluses of crude inventories. The Energy Information Administration (EIA) weekly reports are carefully monitored, and has recorded five straight surpluses. Last week’s surplus was especially large, with reading of 9,.3 million barrels. This marked the highest surplus since May. A more modest surplus is expected in the upcoming release, with a forecast of 2.5 million.
This article was originally posted on FX Empire