Oil steady as markets weigh supply cuts against weak economic data

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Oil steady as markets weigh supply cuts against weak economic data © Reuters. FILE PHOTO: An aerial view shows Shibushi National Petroleum Stockpiling Base in Kagoshima prefecture, Japan January 18, 2019, in this photo taken by Kyodo. Picture taken on January 18, 2019. Mandatory credit Kyodo/via REUTERS/File Photo

By Arathy Somasekhar

(Reuters) – Oil prices held steady on Tuesday as markets weighed supply woes from cuts for August by top exporters Saudi Arabia and Russia against economic data that hinted at weak crude demand.

futures were up 22 cents, or 0.3%, at $74.87 a barrel by 0033 GMT. U.S. West Texas Intermediate crude were at $70.06, up 27 cents, or 0.3%.

U.S. markets will be closed on Tuesday for the nation’s Independence Day holiday. The oil benchmarks had settled down about 1% in the previous session.

Saudi Arabia on Monday said it would extend its voluntary cut of one million barrels per day (bpd) from output to August, the kingdom’s state news agency reported. Russia will also reduce its oil exports by 500,000 bpd in August, Deputy Prime Minister Alexander Novak said.

The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ oil producers to 5.16 million bpd as Riyadh and Moscow look to prop up prices. OPEC+ includes members of the Organisation of the Petroleum Exporting Countries and allies.

inventories were expected to fall by about 1.8 million barrels in the week to June 30, a third straight week of declines. Industry data on inventories will be published on Wednesday and official data on Thursday, both delayed by a day due to the U.S. holiday.

Markets remained worried about oil demand, however, after business surveys showed a slump in global factory activity because of sluggish demand in China and in Europe.

U.S. manufacturing also fell further in June, reaching levels last seen in the initial wave of the COVID-19 pandemic.

A Reuters poll last week forecast that oil prices would struggle for traction this year as global economic headwinds stymie any gains fuelled by a rebound in China or OPEC+ cuts.

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