Oil Steadies as Putin and Modi Huddle in China After US Tariff

A refinery in Houston, Texas. Photographer: Mark Felix/Bloomberg

(Bloomberg) -- Oil steadied within its recent narrow band as traders focused on concerns of a potential glut and signals over Russian supply.

Brent traded near $68, staying in the $65-to-$70 range it’s been in for the last month. India rebutted mounting US pressure to end crude imports from Russia, with the country’s oil minister saying the purchases helped shield the global economy from price spikes. Prime Minister Narendra Modi met with Vladimir Putin at a regional summit in China.

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Monday’s trading is likely to be thin due to the Labor Day holiday in the US.

The global oil benchmark has shed about 10% this year, hurt by a deluge of additional supply from OPEC+, as well as concerns the US-led trade war will crimp energy demand. The producer group, which includes Russia, is scheduled to hold a virtual meeting on Sept. 7 to discuss its next move, with the International Energy Agency forecasting the market faces a record glut next year.

“The strategy shift from OPEC+ to regain market share has lifted the supply outlook,” DNB Carnegie analysts Helge Andre Martinsen and Tobias Ingebritsen wrote in a note. “Combined with sticky non-OPEC supply growth in the short term, it will push the oil market balance into significant oversupply in Q4.”

In the US, hedge funds winnowed their bullish position on US crude to the lowest in about 18 years as uncertainty over economic policy compounded growing concerns about oversupply. In contrast, outright wagers on higher Brent prices rose by the most since early July last week, as the difference in value between the two benchmarks widened.

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