May 23 (UPI) -- Crude oil prices were pulling back toward even in early Tuesday trading, after U.S. budget moves balanced against OPEC narratives.
Crude oil prices were down more than 1 percent in overnight trading as investors mulled over a U.S. budget proposal that would seek to balance the books in part by selling off half of what's stored in the Strategic Petroleum Reserve. The SPR is stocked with about 688 million barrels of oil and the release could add to the oversupply conditions holding oil prices below $60 per barrel.
The decline came against a trend established last week when Russia and Saudi Arabia called for extending a multilateral agreement to balance the market with managed production declines into early 2018, instead of year-end 2017. On Tuesday, Kuwait's oil minister said there was broad consensus for extending the deal.
"If necessity arises, we could increase the output cut," Kuwaiti Oil Minister Essam al-Marzouq told the state-run Kuwait News Agency. "But it is premature to talk about that now."
The speculation was enough to pull crude oil prices out of the overnight slump. The price for Brent crude oil, the global benchmark for the price of oil, and West Texas Intermediate, the U.S. benchmark, were more or less flat at $53.87 per barrel and $51.15 per barrel, respectively.
Investors will start focusing late in the trading day on expected supply and demand metrics in the United States. A preview from S&P Global Platts found most analysts expect to see a draw in crude oil inventories of about 2.8 million barrels. That's a little less than half the official figure from two weeks ago, but would still mark the seventh straight week for a decline if the forecast is accurate.
With travel expected to increase over Memorial Day weekend, Platts said the market will be watching gasoline stocks closely.
"U.S. gasoline stocks have been a source of concern lately for market bulls as inventories have climbed the last five weeks by 4.5 million barrels, versus an average decline of 4.1 million barrels from 2012-16," Oil Futures Editor Geoffrey Craig said in an emailed report.