Oil turns positive as focus turns to US supply outlook

A worker checks the valves at an oil refinery in the southern Iraq city of Basra. (Reuters)

LONDON: Oil reversed early losses to turn positive on Tuesday, as investors awaited crude oil inventory data from the US that was expected to show a shrinking supply overhang.

Brent futures had gained 26 cents to $48.34 a barrel by 1242 GMT, after closing down 37 cents in the previous session.
US crude futures rose 14 cents to $48.49 a barrel, having settled down 33 cents the day before.
Commercial crude stocks in the US likely fell by around 2.5 million barrels to 538.8 million in the week ended May 20, a Reuters poll showed.
The American Petroleum Institute was set to release inventory data, while figures from the US government’s Energy Information Administration are due on Wednesday.
The API is scheduled to release its data at 2030 GMT, while the EIA numbers are due to at 1430 GMT on Wednesday.
“I think the market is preparing for the (US) crude stock data,” said Andy Sommer, senior energy analyst at Axpo Trading in Dietikon, Switzerland.
Oil was stronger earlier in the session, gaining support from a report that Iraq’s oil output has reached 4.7 million barrels per day (bpd) and exports are running at a record 3.9 million bpd.
However Falah Alamri, Iraq’s OPEC governor and head of the State Oil Marketing Organization (SOMO), said at a conference in London that a decision to stop production of 170,000 bpd of Kirkuk crude, and the impact of bad weather and maintenance had slowed output.
A meeting of the OPEC exporter group, including Iran, is scheduled for June 2.
Plans for a deal between OPEC and non-OPEC producers to shore up crude prices by freezing output fell apart in April.
A strike in France limited the market’s gains by denting crude demand in Europe as refineries were disrupted by pickets.
French police using water cannon and tear gas broke up a strike picket that was blocking access to a large oil refinery in the southern port area of Marseille in a government-versus-union showdown over labor law reforms.
Sommer at Axpo Trading added that gains were likely to be short-lived, and that prices were likely to fall again in the coming weeks.
“There’s an ongoing trend of increasing supply. Supply from unplanned outages in Nigeria and Canada are likely to come back,” he said, referring to disruption caused in the two countries by protests and wildfires.