Oil prices hold ground ahead of OPEC+ meeting on extended output cuts

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FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S., April 21, 2020. REUTERS/Drone Base/File Photo

MELBOURNE (Reuters) – Oil prices rose in early trade on Tuesday, with traders waiting to see whether major crude producers agree to extend their huge output cuts to shore up prices at a meeting expected later this week.

Brent crude LCOc1 futures rose 0.3%, or 12 cents, to $38.44 a barrel as of 0011 GMT.

U.S. West Texas Intermediate (WTI) crude CLc1 futures traded in a 38 cent range on either side of Monday’s close, and last traded up 0.3%, or 9 cents, at $35.53 a barrel.

Brent prices have doubled over the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and allies, including Russia, dubbed OPEC+. However, prices are still down about 40% for the year so far.

OPEC+ producers are considering extending their production cut of 9.7 million barrels per day (bpd), or about 10% of global output, into July or August, at an online meeting likely on June 4, which has helped prop up prices this week.

“So long as the current OPEC+ compliance commitment argument for price recovery holds water, oil prices could stabilise at higher ranges,” said Stephen Innes, chief global market strategist at AxiCorp.

Under the OPEC+ plan agreed in April, the record supply cut was to be for May and June, scaling back to a cut of 7.7 million bpd from July through December. Saudi Arabia has led talks pushing to extend the heftier cuts.

A drop in crude stockpiles at Cushing, Oklahoma, which fell to 54.3 million barrels in the week to May 29, also buoyed prices, traders said, citing a Genscape report on Monday.

However trade tension between China and the United States over Beijing’s security clampdown in Hong Kong, as well as manufacturing data on Monday showing Asian and European factories struggling, kept a lid on gains.

Reporting by Sonali Paul; editing by Richard Pullin

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