(Bloomberg) -- Oil rose for a second day on signs OPEC and its allies will extend production cuts beyond June, while a steadily deteriorating U.S.-China trade relationship kept prices from pushing higher.
Futures in New York climbed as much as 0.4% after closing up 0.5% on Monday. Saudi Energy Minister Khalid Al-Falih urged the OPEC+ coalition to “stay the course” on output limits after a meeting in Jeddah over the weekend, although his Russian counterpart, Alexander Novak, talked about potentially relaxing the curbs. Asian stocks opened lower after China warned it could retaliate against the U.S. after Washington blacklisted Huawei Technologies Co.
The possible extension of supply curbs by the Organization of Petroleum Exporting Countries and its allies could be a catalyst for oil to resume this year’s rally, which has floundered over the past month. Rising tension in the Middle East and involuntary output cuts from Venezuela to Russia have also been aiding prices, but the breakdown in relations between the world’s two biggest economies is keeping gains in check.
Signals from the OPEC+ coalition “raised expectations they will maintain production cuts after July,” said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. U.S.-China trade tensions are now heading in a “bad direction” and that’s raising worries in the market, he said.
West Texas Intermediate crude for June delivery, which expires on Tuesday, rose 20 cents to $63.30 a barrel on the New York Mercantile Exchange at 9:26 a.m. in Singapore after advancing as much as 27 cents earlier. The contract added 34 cents to $63.10 on Monday. The more actively-traded July contract climbed 0.4% to $63.43.
Brent for July settlement increased 16 cents, or 0.2%, $72.13 a barrel on the London-based ICE (NYSE:ICE) Futures Europe exchange. The contract fell 24 cents to $71.97 on Monday. The spread between the first and second month contracts remains in strong backwardation, where prompt prices are higher than later-dated prices, indicating tight supply. The global crude benchmark traded at a $8.70 premium to WTI for the same month.
