Oil prices flat; focus on OPEC-led output cuts, Libya oilfield

NEW YORK: Oil prices hovered near flat on Tuesday as the market balanced OPEC-led efforts to tighten crude supply with the restart of Libya's biggest oilfield and the prospect of weaker demand.

Investor hopes for an imminent trade deal between the United States and China also wavered on mixed comments from the White House.

"Oil is still waiting for a deal to come back to table with China," said Phillip Streible, senior commodities strategist at RJO Futures.

Brent, the international benchmark, was unchanged at $65.67 a barrel as of 11:38 a.m. EST (1638 GMT). U.S. West Texas Intermediate crude fell 1 cent to $56.58 a barrel.

Supply curbs by the Organization of the Petroleum Exporting Countries and allies were helping to support crude futures. On Monday, Russia said it would speed up its output cuts this month. Also this week, OPEC sources said the group would likely extend its output cut pact that has driven oil prices about 20 percent higher this year.

"That's what holding prices, and that will ultimately drive prices higher," Streible said.

The restart of Libya's El Sharara oilfield pressured the oil market. The field, which has a capacity of 315,000 barrels a day in supply, had been closed since December.

"The oil market will... be slightly oversupplied again unless production is cut further or unscheduled outages occur elsewhere," Commerzbank said in a report.

Expectations that the latest round of U.S. inventory reports will show rising crude stockpiles also limited the upside. Six analysts polled by Reuters estimated, on average, that crude stocks rose 400,000 barrels in the week to March 1.

The first supply report is due at 4:30 p.m. EST (2130 GMT) from the American Petroleum Institute (API), an industry group, followed by the government's official figures on Wednesday.

Concern about a slowdown in oil demand growth has weighed on prices.

China's government said it is targeting economic growth of 6.0 to 6.5 percent in 2019, lower than the 6.6 percent growth reported last year and raising the prospect of slowing fuel demand.

Trade negotiations between Washington and Beijing added to market uncertainty.

U.S. Secretary of State Mike Pompeo said President Donald Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.

A day earlier, reports that Washington and Beijing could reach a formal agreement in March boosted crude futures.