Oil prices settle as OPEC+ finally agree meeting date

The powerful oil cartel and its allies will meet on July 1-2 after months of market uncertainty.

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    Nodding donkeys will keep nodding as OPEC+ finally agree to meet [Martin Divisek/Bloomberg]
    Nodding donkeys will keep nodding as OPEC+ finally agree to meet [Martin Divisek/Bloomberg]

    Oil held steady in New York after rising the most in more than five months as OPEC set a date for its next meeting after a month of bickering, and as the U.S. and China signaled trade talks would resume.

    Futures edged lower after climbing 3.8% on Tuesday. OPEC and its allies will hold their next meeting on July 1-2 to discuss production curbs. Extending the cuts would shrink global inventories by about 500,000 barrels a day in the second half of this year, according to an OPEC committee, helping boost prices. Separately, the U.S. and China said their leaders will meet in Japan next week to relaunch trade talks.

    There's "likely no escalation of the trade war in the near term, which reduces the oil demand concerns," said Giovanni Staunovo, an oil analyst at UBS Group AG in Zurich. "Tensions in the Middle East remain a concern as well."

    Oil has slipped about 19% since late April as the prolonged U.S.-China trade spat dented the demand outlook. The inability of the Organization of Petroleum Exporting Countries and its allies to agree on a date for ministerial talks added to the turbulence. Tensions in the Middle East, including the latest rocket attack near an Exxon Mobil Corp. workers' camp in southern Iraq, are heightening the market uncertainty.

    West Texas Intermediate for July delivery slipped 14 cents to $53.76 a barrel on the New York Mercantile Exchange as of 10:02 a.m. London time. Futures rose $1.97 to $53.90 on Tuesday, the biggest gain since Jan. 9.

    Brent for August settlement fell 30 cents to $61.84 a barrel on London's ICE Futures Europe Exchange, after closing 2% higher on Tuesday. The global benchmark traded at an $7.80 premium to WTI for the same month.

    OPEC won't have difficulty extending the oil-output cuts, but the discussions in the July meeting will focus on the duration of the next agreement, United Arab Emirates Energy Minister Suhail Al Mazrouei said in Abu Dhabi. The schedule for the gathering agreed on Wednesday was the third set of dates considered, after the original request to postpone the planned June meeting that came from Russia.

    Trade talks between the world's two biggest economies continue to have a major influence on the market. U.S. President Donald Trump said Tuesday that he had a "very good" phone conversation with his Chinese counterpart Xi Jinping. The two leaders will hold an "extended meeting" at the G-20 summit in Osaka on June 28-29. Trump had repeatedly threatened more tariffs if Xi spurned the opportunity to talk.

    SOURCE: Bloomberg