Singapore — Crude oil futures were higher in mid-morning trade in Asia Tuesday on prospects of tightening supplies by OPEC, but ongoing trade disputes between the US and China could cap prices, analysts said.
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At 10:29 am Singapore time (0229 GMT), ICE Brent August futures rose 15 cents/b (0.24%) from Monday's settle at $62.44/b, while the NYMEX July light sweet crude futures contract was up 26 cents/b (0.49%) at $53.52/b.
"Oil prices started the weak on a strong footing [Tuesday] after Saudi energy minister Al-Falih noted that there's almost unanimous agreement in OPEC to extend production cuts, and that Russia could agree before the current deal expires at the end of the month," said Edward Moya, senior market analyst at OANDA.
"Russia remains key for the production side of the argument, but right now it appears, concerns of global growth will trump any tightening of supplies," Moya added.
Market participants also attributed the recent cooling of US-Mexico tensions, which saw the US announcing "indefinite suspension" to a 5% tariff on all Mexico imports, also helped bolster sentiment.
However, ongoing trade disputes between the US and China capped further gains, analyst said.
"The return of the US-China trade issue into the picture looks set to cap gains for markets that had rallied against the back of a series of positive factors since the start of the week," IG market strategist, Pan Jingyi said Tuesday.
"The best result that could be yielded from such an event may be the last G20 where a trade truce would be declared, and negotiators return to the table to spark another bout of market rallies as we have seen at the start of 2019. As such, President Donald Trump's latest threat does appear to be one working towards that "win"," Pan said.
"The complication, however, would be China's stance given the apparent interest to undermine China's ability to lead in the areas such as 5G and the coercive statements suggesting that China "will have to make a deal"," Pan added.
Market participants will keep a lookout for inventory data from the American Petroleum Institute and Energy Information Administration due to be published later Tuesday and Wednesday respectively.
At 0229 GMT, the US dollar index remained flat at 96.765.
--Ng Jing Zhi, firstname.lastname@example.org
--Edited by Nurul Darni, email@example.com