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Oil Prices Climb; Russian Indecision in Focus, Mexico-U.S. Deal Supportive

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Saudi Minister of Energy Khalid al-Falih

Meanwhile, global supply remains at risks amid the recent restriction of the flow of diluents to Venezuela, along with sky-high risks to Libya's output and boiling tensions in the Gulf, suggesting fundamental support remains.

While the expectations that producer cartel OPEC and Russian Federation would like to extend supply output cuts in support of low prices.

Front-month Brent crude futures, the worldwide benchmark for oil prices, were at $63.61 at 0411 GMT, 32 cents, or 0.5%, above Friday's close.

Rig counts in the U.S., an indicator of upstream investment activity, also fell to their lowest since February, pushing the West Texas Intermediate to above $54 per barrel.

USA crude output C-OUT-T-EIA has risen by 1.6 million barrels per day (bpd) over the past year, to a record of 12.4 million bpd, making the United States the world's biggest oil producer ahead of Russian Federation and Saudi Arabia.

Earlier today, the US WTI crude futures were up 0.6% to $53.59.

Beijing said it will allow local governments to use proceeds from special bonds as capital for major investment projects, in a bid to support the slowing economy amid an escalating trade war with the United States.

"Indeed, comments from Novak yesterday that Russian Federation is anxious about oversupply and potentially $40/bbl oil in the second half of the year has further strengthened our view that OPEC+ will agree on an extension to their production cuts".

"This effectively gives us an extra 300,000-400,000 barrels per day of supply", said FGE chairman Fereidun Fesharaki.

Looks like everyone is focusing on the upcoming meeting of the Organization of Petroleum Exporting Countries (OPEC) which is due on 25-26 July.

While the talk of prolonged supply restraint is supporting prices, concern about slowing demand and economic growth has had a bigger impact on sentiment. Global oil demand rises by 1.4 million b/d in 2020 in the forecast, up from expected growth of 1.2 million b/d in 2019.

OPEC+ has been trying to stop inventories building up and the latest weekly reports from the United States are expected to show a small, 500,000-barrel decline in stocks. The American Petroleum Institute (API), an industry group, would issue its report at 2030 GMT.

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