Oil Drifts Lower as Traders Take Stock of OPEC+ Supply Curbs

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(Bloomberg) — Oil edged lower after rising more than 2% Tuesday on Saudi Arabian and Russian output cuts, with traders waiting for potentially critical commentary from Saudi Energy Minister Prince Abdulaziz bin Salman.

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Global benchmark Brent dropped back below $76 a barrel following the gain in the previous low-volume session due to a US holiday. The two OPEC+ linchpins announced their latest batch of curbs on Monday, with a supply-cut extension by Riyadh and a fresh pledge to reduce production from Moscow.

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The Saudi prince is due to address the 8th OPEC International Seminar later Wednesday in Vienna. When announcing the kingdom’s unilateral cut last month, the minister pledged to do “whatever is necessary” to stabilize the market.

Crude has slumped this year as China’s recovery lost momentum and central banks in the US and Europe raised rates to quell inflation, jeopardizing energy demand. The drop in prices prompted a series of interventions by the Organization of Petroleum Exporting Countries and its allies to restrict flows, although after each move prices have failed to hold onto initial gains.

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“All the focus has been on those OPEC production cuts,” ANZ Group Holdings Ltd. analyst Daniel Hynes told Bloomberg Television. Still, given better-than-expected supplies from other nations, tightness in the physical market has eased, resulting in a lack of signals things could get potentially tight, he said.

Key metrics are now strengthening. Brent’s prompt spread — the gap between the two nearest contracts — is back in a bullish, backwardated structure after falling into the opposite pattern for most of the previous two weeks.

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—With assistance from Haidi Lun and Rishaad Salamat.