Since March, oil has been trading at its lowest levels as OPEC signalled a possible output rise.
Oil is trying to create a price low at $77.50 but has found resistance at $79. The price will need buyers to target $80 again.
Oil saw resistance after news reports said Russian Deputy Prime Minister Alexander Novak, the OPEC oil group, would raise crude production. Investors also continue to monitor developments in the Israel-Hamas war. Israel rejected a ceasefire and seized control of territory in the Rafah border crossing with Egypt.
“Oil is lower because a renewed battle between Israel and Hamas, in isolation, does not affect oil-producing nations,” Stewart Glickman, energy equity analyst at CFRA Research, told MarketWatch. Investors are discounting the possibility of a broader conflict.
Russia’s Deputy Prime Minister told the Interfax news agency that increasing oil production within the OPEC+ framework was still possible.
OPEC+ comprises the Organization of the Petroleum Exporting Countries and Russia. The group was expected to continue voluntary cuts of 2.2 million barrels daily beyond the second quarter. The group will decide its production levels at a meeting on June 1.
One obstacle could be a failure to implement the agreed cuts by some countries, including Iraq and Kazakhstan, which exceeded their production targets in the first quarter.
In a monthly report released Tuesday, the Energy Information Administration lowered its oil price forecasts for this year and next. Despite Middle East tensions, the report also said price volatility has been “subdued” by “significant” spare crude production capacity.
Saudi Arabia raised the official selling prices for its crude sold to Asia, Europe and the Mediterranean in June, hinting that the summer will see high demand.
Crude oil has headwinds for further higher moves, but a low level is still possible. After a surprise build in crude stocks last week, markets will also look to inventory data on Wednesday.