Oil futures steadied overnight on signs that OPEC plans to maintain production cuts despite pressure from US President Donald Trump, whose comment criticising rising crude prices sent the market into a tailspin a day earlier.
Prices fell more than 3.5 per cent on Monday, their biggest daily percentage slump this year, after Trump said he wanted the Organisation of the Petroleum Exporting Countries to ease its efforts to boost oil prices.
An OPEC source told Reuters overnight that OPEC would stick to its agreement to tighten crude supplies regardless of Trump’s recent tweet.
Brent crude futures, the global benchmark, rose 67 US cents to $US65.43 or 1 per cent.
US West Texas Intermediate crude futures were up 36 US cents to $US55.84.
‘The market has started to realise that Donald Trump can’t tweet more oil out of the ground, or out of OPEC,’ said Phil Flynn, analyst at Price Futures Group in Chicago.
‘OPEC really wants to get the supplies… back in line,’ Flynn said.
Oil prices have risen about 20 per cent since the start of the year largely on an agreement by OPEC and non-member producers, including Russia, to reduce production.
The OPEC source said the cartel, along with non-member producers, would continue its supply-cut agreement to balance the market until they see inventories fall to their five-year average.
‘There is no doubt we will continue with our reduction as planned,’ the OPEC source said.
OPEC+ agreed in December to cut supply by 1.2 million barrels per day from January 1 for six months.
Growing optimism that the United States and China would secure a trade deal by a March 1 deadline also boosted prices.
Trump on Monday said he may soon sign an agreement with Chinese President Xi Jinping to end a months-long trade war between the two countries.
Libya’s internationally recognised government agreed with the state oil company to reopen the country’s largest oilfield, El Sharara, according to a statement on Tuesday, weighing on prices.
Investors are also looking ahead to weekly figures on US crude inventories.
US crude stocks are expected to rise by 3.6 million barrels in weekly inventory reports.