Investing.com – Crude futures settled higher on Tuesday as oversupply jitters eased somewhat after the Energy information Agency cut its forecast for 2018 U.S. oil production and a report revealed a dip in European crude stockpiles.
On the New York Mercantile Exchange crude futures for August delivery rose 1.4% to settle at $45.04 a barrel, while on London's Intercontinental Exchange, Brent rose by to trade at $47.62 a barrel.
The Energy Information Administration lowered its forecast for U.S. production to 9.9 million barrels per day for 2018, from last month’s forecast of about 10 million barrels per day, easing fears that rising U.S. crude production would derail Opec efforts to reduce excess supply.
In May, Opec and non-Opec members agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.8 million bpd agreed in November last year.
Adding to the positive sentiment on oil, was a report showing an uptick in demand for crude oil in June amid higher refining refinery activity in the region.
The duo of upbeat economic reports came ahead of weekly data on U.S crude inventories expected to show a draw in crude stockpiles for a second week in a row.
Some analysts, however, warned that without further intervention from Opec and its allies’ or a drop in both U.S. crude oil stockpiles and drilling rigs, oil prices remained at risk from falling below key price levels.
A failure for these shifts to materialize soon could push prices below $40/bbl as the market tests OPEC's and shale's reaction functions," Goldman analysts wrote in a research note. "Importantly, we wouldn't expect such a move to be volatile, as it is not driven by storage concerns like last year ... but the ongoing search for a new equilibrium."