Oil Futures Fall Flat on Tuesday

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled little changed on Tuesday ahead of U.S. inventory data, while Organization of Petroleum Exporting Countries signal plans to extend their supply cut agreement into the second half of the year.

Oil futures continue to draw support from OPEC efforts to limit available supplies on the global market. OPEC's cumulative output reached a five year low in May, driven mostly by steep declines in production from Saudi Arabia, which fell last month to the lowest level since March 2014. Saudi Arabia officials said this week that almost all members of OPEC+ alliance agree the extension of supply cut agreement is necessary to balance the volatile market. OPEC+ set to meet in Vienna on June 25-26 to finalize the debate on the cartel's policy for the next six months.

The Energy Information Administration revised down production from the 14-member cartel for both 2019 and 2020 years, according to its' Short-Term Energy Outlook released on Tuesday.

OPEC+ members might opt to delay the scheduled meeting until G-20 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 trade agreement. Russia's energy minister 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 meeting between the two presidents fails.

EIA Tuesday also revised down its forecast for world oil consumption for both 2019 and 2020 from month prior estimates, with global supply projected to outpace demand by 26,000 barrels per day (bpd) in 2020. "Demand-side concerns became the most salient issue during the past month and contributed to volatility and price declines for risk assets such as commodities and equities. Both China and the United States issued tariffs on each other, with the United States also announcing potential tariffs on Mexico near the end of May" said EIA in its latest STEO.

Market participants are looking ahead to supply data from the American Petroleum Institute set to be published Tuesday afternoon at 4:30 p.m. EST while official figures from the EIA are slated for release Wednesday at 10:30 a.m. EST. Analysts expect U.S. crude stockpiles to have declined 600,000 barrels (bbl) in the week ended June 7, while gasoline inventories are seen rising by 500,000 bbl, on average, for the profiled week. Stocks of distillates, which include heating oil and diesel, are expected to rise by 1 million barrels. Refinery use likely rose 0.4 percentage points to 92.2% of capacity.

NYMEX July West Texas Intermediate crude futures settled up 1 cent at $53.27 bbl, with ICE August Brent settling flat at $62.29 bbl.

NYMEX July RBOB futures gained 2.60 cents to $1.7563 gallon, while the July ULSD contract settled 1.58 cents at $1.8221 gallon.

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