File photo. Photograph:( Reuters )
Brent futures rose 17 cents, or 0.3 per cent, to $61.09 a barrel by 0516 GMT, after having gained 0.7 per cent on Monday
Oil prices gained on Tuesday, as hopes rose for OPEC and its allies to agree deeper output cuts when they meet this week, although gains were limited, amid some analysts' skepticism over the achievement of further reductions.
Brent futures rose 17 cents, or 0.3 per cent, to $61.09 a barrel by 0516 GMT, after having gained 0.7 per cent on Monday.
US West Texas Intermediate crude was up 25 cents, or 0.5 per cent, at $56.21 a barrel. The contract rose by 1.4 per cent on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are discussing a plan to increase an existing supply cut of 1.2 million barrels per day (BPD) by a further 400,000 BPD and extend the pact until June, two sources familiar with the matter said.
Saudi Arabia is pushing the plan to deliver a positive surprise to the market before the initial public offering (IPO) of state-owned Saudi Aramco, the sources said.
"We believe the global oil supply-demand balance requires an extension of the current OPEC+ cuts," Goldman Sachs said in a research note.
The factors behind this view included a large increase in production from legacy non-OPEC projects and a still uncertain outlook for demand growth, it added.
The investment bank said it expected Brent to trade around $60 a barrel in 2020, "absent new growth or geopolitical shocks".
OPEC ministers will meet in Vienna on Thursday and the wider OPEC+ group will gather on Friday.
"(The) oil price is little moved today, suggesting that traders are skeptical about the additional 400,000 BPD cut on top of the extension of (the) current production cut agreement," said Margaret Yang, market analyst at CMC Markets in Singapore.
Concerns about the inability of the United States and China, the world's two biggest oil users, to reach a preliminary deal to resolve their 17-month trade dispute also weighed on oil prices, along with discouraging US economic data.
A senior adviser to President Donald Trump said a US-China trade deal was still possible before the end of the year, adding that the first phase of the agreement was being put to paper, although the talks have dragged on for weeks.
While OPEC may cut output, US producers have been only too happy to meet any market shortfalls, with production set successive records. Growth into 2020, though, may range between 100,000 BPD and 1 million BPD.
US crude inventories are expected to have declined last week, which may support prices, with analysts in a preliminary Reuters poll suggesting a contraction of 1.8 million barrels.
In a sign of buying interest for oil, fund managers increased net long positions in US crude futures and options in the week to November 26, the US Commodities Futures Trading Commission said.