Oil Ekes Out Minuscule Gains As Traders Assess Strong Demand Signs

However, OPEC's weekend meeting could make the gains short-lived: File Image/Pixabay

Encouraging demand news from various points of the globe was said to be the main driver of oil on Tuesday achieving modest gains, with investors also keeping a hopeful eye on developments in U.S. trade talks.

Brent settled up 37 cents at $67.11 per barrel, while West Texas Intermediate settled up 34 cents at $65.45 per barrel.

China's factory activity returned to expansion mode last month, with the Caixin/S&P Global manufacturing PMI rising to 50.4 in June from 48.3 in May; the reading was at odds with the country's official PMI published on Monday showing factory activity shrinking for a third straight month.

However, both surveys showed that export orders remained in negative territory last month.

Investors were also motivated by analytical expectations that Saudi Arabia will raise its August crude oil prices for Asian buyers to a four-month high, as well as firm premiums for Russian ESPO Blend crude.

Meanwhile, talk on Tuesday in Washington circles was that U.S. president Donald Trump was close to signing a trade deal with India; Trump remained confident that a breakthrough with China would follow.

Largely ignored on Tuesday was data from the American Petroleum Institute showing that U.S. crude inventories rose by about 680,000 barrels for the week ended Jun. 28, compared with a decline of 4.3 million barrels reported by the API for the previous week; gasoline stockpiles also increased during the same time period, by 1.9 million barrels.

Arguably, sentiment could turn when the Energy Information Administration releases the official inventory report on Wednesday.

Another potential influence on oil trading in the near future could come from the Organization of the Petroleum Exporting Countries (OPEC), which is expected to agree to a fourth monthly major supply increase when it meets on Sunday to discuss the matter, as Saudi Arabia continues to try and reclaim market share.

Bloomberg on Tuesday pointed out that "One gauge of implied volatility fell to the lowest since June 10, just before Israel launched its aerial campaign against Iran," and Ole Hansen, head of commodities strategy at Saxo Bank, said "There is no doubt traders are still suffering from the recent whiplash, which may lower liquidity in the short term."