Oil prices gained on Tuesday, as hopes rose for OPEC and its allies to agree deeper output cuts when they meet this week, although gains were limited, amid some analysts' skepticism over the achievement of further reductions.
Worldwide benchmark Brent crude was trading at $61.03 per barrel at 0628 GMT on Tuesday for a 0.25% gain after it closed Monday at $60.88 a barrel. West Texas Intermediate (WTI) futures rose 91 cents, or 1.7%, to $56.08 a barrel, having risen by more than $1 earlier.
But oil rose on Monday after factory activity in November in China, the world's biggest oil importer, increased for the first time in seven months because of rising domestic demand amid government stimulus measures.
Oil extended gains as Opec crude output dropped before the group and its allies meet this week to set the path for future production cuts.
OPEC+ has signaled it'll stick with its existing production deal, but Iraq said on Sunday that the group may consider deepening output cuts.
Saudi Arabia is pushing the plan to deliver a positive surprise to the market before the initial public offering of state-owned Saudi Aramco, the sources said.
Further, the same belief is endorsed by the United States banking giant Goldman Sachs, as it says that "we believe the global oil supply-demand balance requires an extension of the current OPEC+ cuts".
"Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful three-month extension is unlikely to provide much upside to current prices".
In November, both countries were showing indications for a possible signing of the "phase one" trade deal but on Tuesday, Donald Trump hinted that the deal will have to wait after the presidential election in November 2020 and that brought some chill on investors heart thereby weakening their appetite.
Concerns about the inability of the United States and China, the world's two biggest oil users, to reach a preliminary deal to resolve their 17-month trade dispute also weighed on oil prices, along with discouraging U.S. economic data.
The investment bank said it expects Brent to trade around $60 a barrel in 2020 in the absence of geopolitical shocks.
OPEC's ministers will meet in Vienna on December 5 and the wider OPEC+ group will meet on December 6.
U.S. crude inventories probably shrank by 1.5 million barrels last week, according to a Bloomberg survey.
USA crude oil inventories likely declined by 1.8 million barrels last week, according to six analysts polled by Reuters.
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