Oil steady in early Tuesday trade

Oil prices were steady on early Tuesday ahead of the release of an OPEC+ market outlook, as traders awaited signals on whether supply cuts would continue, alongside upcoming US inflation data shaping monetary policy expectations, Bloomberg reported.

Brent hovered above $83 a barrel after a 0.7 per cent increase on Monday, while West Texas Intermediate (WTI) stood near $79. Despite indications of refinery run reductions and narrowing time spreads hinting at a slightly softer market, the cartel’s monthly analysis arrives approximately two weeks before its policy meeting.

In the US, attention turns to producer price data on Tuesday, followed by consumer price data the next day, providing insights into the Federal Reserve‘s potential maneuvering regarding interest rates for the remainder of the year, or whether rate cut expectations might extend into 2025.

Crude prices have seen a decline since April, as the geopolitical risk premium stemming from Middle Eastern tensions has largely dissipated. Nonetheless, prices remain higher year-to-date due to ongoing supply restrictions by OPEC+ and its allies, who are widely anticipated to prolong the curbs into the latter half of the year.

“We think OPEC+ are likely to keep current production plans unchanged, thereby entrenching voluntary supply cuts,” remarked Vivek Dhar, an analyst at Commonwealth Bank of Australia.

Against this backdrop, coupled with expectations of interest rate reductions in advanced economies, Dhar forecasts Brent to average $80 a barrel in the third quarter and $85 in the final months of the year.