© Reuters.
Investing.com – Oil prices moved in a narrow range on Tuesday, holding after a choppy session as more supply cuts from Saudi Arabia and Russia weighed on signs of worsening economic activity around the world.
Saudi Arabia said it would extend its recently announced cuts of 1 million barrels per day until August and possibly beyond, while Russia also said it would cut its oil exports by 500,000 barrels per day.
But optimism about supply cuts was largely overshadowed by weak manufacturing activity readings from the United States, Germany and China on Monday. The readings sparked more fears that global economic conditions will worsen this year, affecting demand for crude oil.
It fell 0.2% to $74.86 a barrel, while it rose 0.4% to $70.05 a barrel by 21:28 EST (01:28 GMT). Both contracts closed in a flat to lower range on Monday, after a choppy session.
The OPEC meeting is in focus
The Saudi and Russian supply cuts come just before a conference of the Organization of the Petroleum Exporting Countries (OPEC) and its allies this week. The chief executives of major international oil companies are scheduled to meet energy ministers from OPEC countries on Wednesday and Thursday, which could provide more signals to the oil markets.
OPEC has cut oil production twice this year to support prices. But both cuts provided very limited support for oil prices, with fears of a global economic slowdown far outweighing any signs of shrinking supplies.
Markets will be watching for any further signs of tightening production from the OPEC conference, although since it is not a formal meeting the chances of any further changes in production are slim.
Fed signals awaiting dismal manufacturing data
The focus this week is also on more signals about US monetary policy, starting with the Fed’s June meeting scheduled for Wednesday. The central bank kept interest rates unchanged last month, but signaled at least two more hikes this year.
The prospect of higher interest rates has weighed on oil prices this year, as markets fear further demand headwinds from tightening monetary conditions.
Significantly weaker-than-expected manufacturing data from the world’s largest economies reinforced that notion on Monday, weighing on crude oil markets.
The focus this week is also on data for the month of June, which is also expected to influence the Fed’s interest rate plans.