Oil prices were steady on Monday helped by reports that OPEC and Russia were closer to a deal on extending oil cuts but held back by renewed tension between the US and China.
Benchmark Brent crude was up 10 cents, or 0.3 percent, at $37.94 a barrel at 0854 GMT. US crude had dipped 10 cents, or 0.3 percent, at $35.39 a barrel.
The Organization of the Petroleum Exporting Countries and Russia, part of a group known as OPEC+, are moving closer to a compromise on the duration for extending oil output cuts and were discussing rolling over the curbs one to two months, two OPEC+ sources told Reuters.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10. Russia has said it has no objection to meeting sooner.
“The fact that crude ... prices have not reacted much to the news of the potential cut extension can be seen as a sign that the market has already priced in a lot of optimism,” JBC Energy analysts said in a note.
Tension between China and the US was also encouraging some caution. Beijing has ordered major state-run firms to pause some purchases of US farm goods, including soybeans, Bloomberg News reported.
“The possibility of heightened tensions does pose a risk for the recent rally in oil prices,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
US President Donald Trump’s directive to begin the process of eliminating special treatment for Hong Kong is likely to create a new driver of volatility in global markets as tensions between Washington and Beijing climb again. Manufacturing data has also showed that Asian and European factories were struggling as lockdowns due to the coronavirus pandemic kept demand in check.