Oil Prices Drop as Russia, OPEC Sign Output Deal Extension

Concerns that the global economy could be slowing slipped on Tuesday, outweighing an agreement by producer club OPEC on Monday to extend supply cuts until next March, Reuters reported.

At 0845 GMT, Brent crude futures were down 18 cents, or 0.28%, at $64.88 a barrel.

U.S. crude futures for August were down 20 cents, or 0.34%, at $58.89 a barrel, after touching their highest in more than five weeks on Monday.

The Organization of the Petroleum Exporting Countries (OPEC) agreed on Monday to extend oil supply cuts until March 2020 as members overcame their differences to try to prop up the price of crude.

“It appears that the supply side of the oil equation is supportive for oil prices but demand concerns are forcing oil bulls to keep at least part of their gunpowder dry,” PVM analyst Tamas Varga wrote in a note.

OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging U.S. output.

Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts until December 2019 or March 2020, and Saudi Energy Minister Khalid al-Falih said on Tuesday he was 100% confident of an OPEC+ deal.

Meanwhile, U.S. crude oil stockpiles were seen falling for a third consecutive week, a preliminary Reuters poll showed on Monday, also supporting prices.