Oil. Picture: REUTERS
Oil. Picture: REUTERS

Singapore — Oil prices stabilised on Tuesday on expectations that producer group Opec and its allies will keep withholding supply to prevent prices from tumbling amid a broad economic slowdown which has started eating away at fuel demand growth.

Front-month Brent crude futures, the international benchmark for oil prices, were at $62.36 at 0023 GMT, 7c, or 0.1%, above Friday’s close.

US West Texas Intermediate (WTI) crude futures were at $53.42 per barrel, 16c or 0.3%, above their last settlement.

Prices fell by around 1% in the previous session and crude futures are down by some 20% from their 2019 peaks in late April, dragged lower by a widespread economic downturn that has started to impact oil consumption.

Russia on Monday said it might support an extension of supply cuts that have been in place since January, warning oil prices could fall as low as $30 per barrel if producers supply too much crude.

The Organisation of the Petroleum Exporting Countries (Opec) and some nonaffiliated producers including Russia, known collectively as Opec+, have withheld supplies since the start of 2019 to prop up prices.

Opec+ is due to meet in late June or early July to decide output policy for the rest of 2019.

“Due to the general fear of an economic downturn and the realisation that demand growth is slowing no one will argue for abandoning (the) Opec+ accord,” said Fereidun Fesharaki, chairman of energy consultancy FGE, in a note published on Tuesday.

FGE said global crude oil demand growth could drop below 1-million barrels per day (bpd) in 2019, down from previous expectations of 1.3- to 1.4-million bpd.

“This effectively gives us an extra 300,000-400,000 barrels per day of supply,” said Fesharaki.