US oil prices up as traders await China data, OPEC meeting

 31 May 2016 - 10:55

US oil prices up as traders await China data, OPEC meeting


Singapore: US crude rose in Asia Tuesday as investors awaited manufacturing data from China and before an OPEC meeting on production caps this week.

Dealers expect Chinese manufacturing data due on Wednesday to set the tone at mid-week, with volumes thin after US and UK financial markets closed for a public holiday.

China is the world's largest energy consumer so any indication of how its economy is performing acts as a key driver for oil prices.

"If the number is positive, it should help in prices as China is one of the drivers for the commodity," CMC Markets trader Alex Wijaya told AFP.

"Major markets were closed yesterday so there wasn't much of a driver for prices. Today should be pretty quiet as well."

At about 0700 GMT, US benchmark West Texas Intermediate (WTI), for delivery in July, was up 26 cents at $49.59 a barrel. Brent North Sea crude for July was down 12 cents at $49.64.

Oil prices dipped on Monday after comments from the US central bank head Janet Yellen suggested interest rates could rise soon if the world's top economy continues to improve.

The expectation of a US rate hike pushed up the greenback, hurting dollar-denominated oil by making it more expensive for buyers with weaker currencies and denting demand.

But WTI managed to eek out gains on Tuesday ahead of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on June 2.

Gatherings of some of the world's biggest producers are always closely watched by oil traders, but few are expecting a deal to cap production will be reached after similar efforts failed in April.

Iran, a key member of OPEC, has said it has no plans to join any output freeze by other major crude producers after returning to world oil markets in January with the lifting of Western sanctions.

"I think the general sentiment is that traders do not have much expectations for an OPEC agreement," Wijaya said. 

"Given all the major developments so far, traders are not expecting any major surprises."

Crude prices briefly topped the psychological $50 a barrel last week for the first time this year as production disruptions in Canada and Nigeria eased short-term concerns about abundant global supplies.

But prices remain less than half of their 2014 peaks due to a glut of world supplies that experts predict could last for years.