© Reuters. FILE PHOTO: A seagull flies in front of an oil platform in the Bouri Oilfield some 70 nautical miles north of the coast of Libya

By Henning Gloystein

SINGAPORE (Reuters) – Oil costs dipped on Tuesday amid tepid prospects for development in fuel demand, but OPEC-led efforts to reduce output presented some help.

U.S. West Texas Intermediate (WTI) crude oil futures had been at $56.46 per barrel at 0136 GMT, down 13 cents, or .two %, from their final settlement.

futures had been at $65.60 per barrel, down 7 cents, or .1 %.

“Close to term … it is challenging to get incredibly bullish on oil costs. The industry is nonetheless operating off the surpluses constructed in H2 2018, maintaining OECD industrial inventories stuck above the 5-year typical,” stated power analysts at financial study firm TS Lombard.

And regardless of optimism that the United States and China will quickly finish their bitter trade disputes, oil demand development has been slowing along with an financial slowdown particularly in Europe and Asia.

Meanwhile, fuel efficiency is enhancing, denting demand development.

“2018 was the weakest (refined item) demand development year due to the fact 2011,” Bank of America Merrill Lynch (NYSE:) stated in a note.

To prop up the industry, the Organization of the Petroleum Exporting Nations (OPEC) has led efforts due to the fact the begin of the year to withhold about 1.two million barrels per day (bpd) of provide.

The OPEC-led provide cuts, as properly as U.S. sanctions against its members Iran and Venezuela, come at the exact same time as output chases ever new records, increasing by much more than two million barrels per day (bpd) due to the fact early 2018 and above 12 million bpd for the very first time in February.

The cuts to OPEC provide have pushed up the Brent international crude cost benchmark as there is a shortage of heavy crudes that OPEC largely produces, though the surge in U.S. output is weighing down U.S. WTI costs as there is ample provide of America’s light crudes that its shale reserves largely churn out.

Simply because of this, power researchers at TS Lombard stated “the Brent-WTI spread can be anticipated to keep wide.”

WTI’s front-month cost spread to Brent has declined from close to parity in 2016 to an typical discount of $eight.five per barrel due to the fact the begin of 2019.

Throughout the exact same time, U.S. crude output has risen by pretty much three million bpd.

(Corrects day in paragraph 1 to Tuesday, not Monday)

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