Oil Futures Edge Higher on OPEC Output

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted higher in early trade, lifted by rallying equities while market participants focus on a global supply agreement ahead of inventory figures scheduled for later Tuesday.

Just ahead of 9 a.m. EDT, NYMEX July West Texas Intermediate futures were up $0.65 near $53.90 bbl, with ICE August Brent $0.40 higher near $62.70 bbl. NYMEX July RBOB futures were 2.1cts higher near $1.7515 gallon, with the July ULSD contract gaining 1.55cts to near $1.8220 gallon.

Oil futures gained ground in early trading Tuesday, as production from the Organization of the Petroleum Exporting Countries fell in May to the lowest level in nearly five years, driven by steep output declines in Saudi Arabia. Argus reports Saudi production plunged to 9.65 million bpd last month, nearly 650,000 bpd below its 10.3 million bpd pledge under the OPEC+ accord.

Market participants have refocused this week on the upcoming OPEC+ meeting scheduled for June 25-26 in Vienna and the raging debates among key members on the strategy for the next six months. The Saudi energy minister said on Monday Russia is the only participant of the OPEC+ agreement that is still undecided over its commitment to rollover cuts into the second half of the year.

OPEC+ members might opt to delay the scheduled meeting until after the G20 Summit in Tokyo on June 28-29 where U.S. President Donald J. Trump is expected to meet his Chinese counterpart Xi Jinping to discuss a bilateral trade agreement.

Russian Energy Minister Alexander Novak said on Monday that among many uncertainties in the market, the outlook for U.S.-China trade remains the key factor for the oil markets. Meanwhile, the White House warned that additional tariffs on $300 billion in Chinese products would automatically go into effect if the meeting between the two presidents fails.

In financial markets, U.S. stock indexes notched the sixth consecutive session of gains on Monday after the Trump administration reversed course on imposing 5% tariffs on Mexico. Dow Jones Industrial Average futures rose again in early trade Tuesday, along with S&P 500 futures to offer additional support for oil futures and other risk assets.

Market participants are looking ahead to Tuesday supply data from the American Petroleum Institute set to be published 4:30 p.m. EDT and the official figures from the Energy Information Administration at 10:30 a.m. EDT Wednesday.

Liubov Georges can be reached at liubov.georges@dtn.com