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  • Oil regains some poise on Tuesday, as armed forces threaten to oil Libyan oil production. 
  • WTI defends $38.00 but remains below Monday’s low of $40.44.
  • OPEC+ to extend the oil output cut deal, but Gulf OPEC producers to end voluntary cuts from next month.

Oil prices are flashing green in Asia, having snapped a seven-day winning streak with a 3.4% decline on Monday. 

At press time, West Texas Intermediate (WTI) is trading near 38.70 per barrel, representing a 1.3% gain on the day. Prices hit a high of $40.44 on Monday but closed in the red at $38.19. 

The gains seen at press time could be associated with the comments from Libya’s National Oil Corporation that armed forces have entered El Sharara oilfield and asked employees to stop work. One of the reasons for Monday’s price drop was the news that Libya has restarted production at its largest oil field (El Sharara).

Additionally, report that Gulf OPEC producers, which pledged voluntary output cuts of 1.18 million barrels per day from June 1,  have no plans to extend reductions beyond this month likely had a bearing on black gold. 

However, OPEC+, a group of producers led by Saudi Arabia and Russia, which agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June to support prices, decided on Saturday to sustain those cuts through July.

Oil may also find support from increased Chinese buying. The dragon nation’s purchases hit a record high of 11.3 million barrels per day in May.    

That said, fears of an uptick in output from North American shale-oil producers and Mexico’s refusal to comply with production cuts could play spoilsport. 

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