NEW YORK (Reuters) – Oil prices were steady in volatile trading on Monday as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal and U.S.-China trade tensions continued to threaten demand for crude.
FILE PHOTO: A view shows a well head and a drilling rig in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 11, 2019. REUTERS/Vasily Fedosenko/File Photo
Brent crude futures rose 2 cents to $63.31 a barrel by 11:02 a.m. EDT (1529 GMT). U.S. West Texas Intermediate (WTI) crude gained 23 cents to $54.22 a barrel.
Saudi Energy Minister Khalid al-Falih said that Russia was the only oil exporter still undecided on the need to extend the output deal agreed by top producers.
The Organization of the Petroleum Exporting Countries and some non-members, including Russia, have withheld supplies since the start of the year to prop up prices. The deal is due to expire this month.
Yet, Russian energy minister Alexander Novak said there is a still a risk that oil producers pump out too much crude and prices fall sharply. Novak said he could not rule out a drop in oil prices to $30 per barrel if the global deal was not extended.
“Indeed, there are big risks of over-production. But on the whole … we need to analyze deeper and look at how the events will develop in June in order to take a balanced decision at the joint OPEC+ meeting in July.”
Many oil exporting countries have confirmed they are prepared to hold a policy meeting with OPEC in Vienna over July 2-4, instead of the scheduled date later this month, Novak said.
On the demand side, analysts remained concerned about a slowing global economy due to the United States’ trade war with China.
U.S. President Donald Trump said additional tariffs on Chinese goods were ready to kick in after the G20 summit this month if no trade deal is reached with China.
China’s foreign ministry said that China is open for more trade talks with Washington but has nothing to announce about a possible meeting.
China’s crude oil imports slipped to around 40.23 million tonnes in May, from an all-time high of 43.73 million tonnes in April, customs data showed, due to a drop in Iranian imports caused by U.S. sanctions and refinery maintenance.
“As U.S.-China tariff concerns heighten, we see more downward adjustments to world oil demand both across this year and next in providing a limiter on occasional price advances,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
Barclays bank, in a note, said its economists had revised down their GDP growth outlook for the United States, China, India and Brazil – countries that account for more than three-quarters of their oil demand growth assumptions for this year.
“The revisions imply a 300,000 barrel per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year,” the British bank said.
Additional reporting by Noah Browning in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Kirsten Donovan