Oil prices added to Monday's modest gains in Asia, buoyed by technical buying even as investors remain skeptical that production cuts led by Middle Eastern producers and Russia are helping to alleviate a years-long market glut.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July recently traded up 0.4% at $46.25 a barrel in the Globex electronic session while August Brent crude on London's ICE Futures exchange rose 0.4% to $48.47. That after oil reversed a bit of last week's near-4% decline on Monday amid a pipeline leak in Nigeria and Saudi Arabia's energy minister expressing confidence that market rebalancing will soon gather steam.
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"Actually," countered Gao Jian, an energy analyst at consultancy SCI International, there isn't much "good news for us to trade on at the moment."
Late last year, 11 members of the Organization of the Petroleum Exporting Countries and major non-U.S. producers such as Russia agreed to reduce their production starting in January. Even though the deal was recently extended to next March, investor faith in the deal has greatly faded as analysts say U.S. shale producers have boosted output while other have reduced theirs, keeping the world awash with oil.
Meanwhile, production has been rebounding in Nigeria and Libya, two OPEC nations not included in the output-cut deal.
The lack of compelling physical tightening in the market this year has knocked Brent futures down some 15% this year. Signs of progress in cutting global inventories could come via OPEC's monthly oil report due later Tuesday. Followed a day later by weekly U.S. data, if both show noted declines "we think the market could begin to move higher sooner rather than later, with money managers looking to rebuild long positions," said Tim Evans at Citi Futures.
For oil products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--gained 0.1% to $1.4897 a gallon, July diesel added 0.2% to $1.4278 and ICE gasoil eased 0.8% to $426.25 a metric ton.
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(END) Dow Jones Newswires
June 12, 2017 23:51 ET (03:51 GMT)