DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved higher in early trade Tuesday even as investors took a cautious stance ahead of the second round of talks among members of the OPEC+ coalition later this morning, with Russia and Saudi Arabia expected to iron out their differences on production quotas for February, and an election runoff in Georgia that will determine the balance of power in the U.S. Senate and legislative agenda for a Biden administration.

After starting the week with a selloff, NYMEX February West Texas Intermediate futures clawed back $0.67 to trade near $48.31 per barrel (bbl), while International crude benchmark for March delivery gained a steeper $0.72 to $51.81 bbl. Both the WTI and Brent contracts fell as much as 2% on Monday. NYMEX February ULSD contract advanced 1.94 cents to $1.4812 gallon, while the RBOB contract for February moved up 1.82 cents to $1.3910 gallon.

Organization of the Petroleum Exporting Countries and their partners outside of the cartel are set to reconvene later Tuesday to decide on whether to taper production cuts by additional 500,000 barrels per day (bpd) to 6.7 million bpd in February. The majority of OPEC+ members were reportedly in favor of maintaining production quotas unchanged for February but were unable to budge Russia and Kazakhstan from their position that the alliance should raise crude production to reclaim lost market share.

"To restore our output, that we've reduced a lot, the price range of $45 to $55 a barrel is the most optimal," Russian Deputy Prime Minister Alexander Novak told reporters in Moscow. "Otherwise we'll never restore production, others will restore it."

To Novak's point, countries like Libya, Iran and the United States have already ramped up output, with OPEC members Libya and Iran exempt from the production agreement.

In sharp contrast, Saudi Arabia -- de facto leader of 23-nation cartel, is more focused on market fundamentals that have been softening as a result of yet another round of lockdowns across major global economies. On Monday, England and Scotland entered a full nationwide lockdown that is threatening to overwhelm the country's health system. Germany is likely to extend its quarantine restrictions through the end of January, undermining a fragile economic recovery that has been underway since early summer.

Eurozone industrial data shows manufacturers across the 19-nation bloc recorded slight improvement for new orders and backlogs at the end of last year, with Purchasing Manufacturer Index climbing above the 50-mark that separates growth from contraction.

Domestically, investors await the release of Institute of Supply Management's manufacturing index slated for 10 a.m. ET, with headline consensus calling for a month-on-month decline to 56.5 from 57.5 for November.

U.S. equity futures edged modestly higher Tuesday as investors watch Georgia's special elections for two seats in the Senate that will define the composition of the 117th Congress and the broader legislative agenda of President-elect Joe Biden. A swing to the Democrats could lead to deeper fiscal stimulus and a higher-tax legislature, while Republican wins would balance the Senate and keep Biden administration from implementing some of his bold policies on trade and energy.

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

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