By Adedapo Adesanya
Oil prices gained on Tuesday following a report that the Organisation of Petroleum Exporting Countries (OPEC) and its allies would consider deeper production cuts when they meet in December. As a result of this, major futures logged their first gain in three sessions.
On Tuesday, the Brent crude oil rose by 1.22 percent or 72 Cents to trade higher at $59.59 per barrel, while the US West Texas Intermediate crude gained 1.64 percent or 88 cents to settle at $54.39 per barrel.
Members of the oil cartel and their allies will consider making further reductions to crude output when they meet in December due to growing concerns about a slowdown in growth for oil demand.
Earlier in July, OPEC and Russia, together with other non-OPEC members, agreed to extend a 1.2 million barrel a day production cut for nine months.
Saudi Arabia has made the largest cutbacks but wants to producers to follow the agreement, as Iraq and Nigeria are among the countries that haven’t fully complied with the reductions.
On the political front, the trade war between the US and China continued to impact on oil demand growth but prices had been slightly trading higher earlier after China signalled progress in trade talks between both countries.
Chinese Vice Foreign Minister Le Yucheng said on Tuesday that problem between the world’s largest economies could be resolved as long as both sides respected each other.
Oil prices however were pressured by forecasts of a buildup in US crude stockpiles as inventories are expected to have risen for a sixth straight week, while distillates and gasoline stocks likely fell in the week to October 18.
The American Petroleum Institute will release its weekly inventory update at 4:30 p.m. Eastern time Tuesday (yet to be released as at press time), ahead of the US Energy Information Administration due at 10:30 a.m. Wednesday.
Modupe Gbadeyanka