Oil prices remain steady as investors focus on prospect of tighter supply

Oil prices stayed flat on Monday, as investors concerns over the prospect of a global economic downturn were quelled by the promise of a reduction in US crude stockpiles and a tightening of supply across the industry.

Brent crude oil futures rose by just 30 cents to $67.33 a barrel on Monday afternoon, while US West Texas Intermediate (WTI) futures increased by only 11 cents to $59.15 a barrel.

Investors shift focus to US crude inventories

Weekly figures on US oil from the American Petroleum Institute (API) will be released on Tuesday, closely followed by figures from the Energy Information Administration (EIA) on Wednesday.

Oil prices have been supported by the fact that US crude inventories have come down for two consecutive weeks, falling by as much as 10 million barrels in the latest EIA report.

‘The oil market was worried about a global recession, and now we’re kind of shaking that off and thinking that if the U.S. stock market can turn higher, maybe things aren’t so bad,’ Phil Flynn, an analyst at Price Futures Group in Chicago told Reuters.

‘Now we’re focusing on (oil) inventories ... and people aren’t going to want to be short into the inventory report, which is probably going to show another big drawdown.’

OPEC supply cuts provide added support to oil prices

Ongoing supply cuts made by the Organisation of the Petroleum Exporting Countries (OPEC), along with non-OPEC members like Russia have provided added support to oil prices since the start of this year.

In fact, the organisation’s de facto leader, Saudi Arabia, is attempting to push the price of Brent crude to above $70 a barrel.

‘Oil supply fundamentals remain price-constructive with OPEC+ collectively making good progress on pledged supply cuts,’ BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.

‘Oil market-specific reports, which point to tighter supply, are preventing prices from falling any more sharply.’