Oil prices were up early on Tuesday as market participants turned their attention to the tension around Iran and OPEC’s extended cuts, awaiting a busy week of reports and testimonies that could give them a clue about oil market fundamentals and a possible Fed rate cut as soon as later this month.
Prices were supported on Tuesday by reports that Russia’s oil production in early July is down to its lowest in nearly three years.
“The Russian story definitely supports prices today,” Giovanni Staunovo, an oil analyst with UBS, told Reuters.
The market has been concerned that Russia wouldn’t fully comply with the extended cuts, so the lower production in early July, plus OPEC’s estimated high compliance with the cuts, could bring the market back to balance faster, Staunovo added.
This week, oil market participants, and actually all market participants, will be closely watching the appearance of Fed chairman Jerome Powell before the House Financial Services committee and the Senate banking panel on Wednesday and Thursday, respectively, in which he is widely expected to say that rate cuts remain definitely on the table.
OPEC and the International Energy Agency (IEA) will release their monthly reports on the state of the oil market this week, on Thursday and Friday, respectively, possibly providing fresh outlooks on oil demand and supply.
Before that, on Tuesday and Wednesday, oil prices could find firmer direction with the inventory reports of the American Petroleum Institute (API) later on Tuesday and the EIA on Wednesday.
According to ING, expectations in a Bloomberg survey point to a draw of some 2.55 million barrels in U.S. crude oil inventories over the last week, and a 2.2 million barrel draw in gasoline inventories.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More