Brent crude oil has been struggling to break above $80/b despite a deteriorating outlook for production in Venezuela and the not yet quantifiable impact of US sanctions on Iran.
A ten-dollar rally since early April could indicate that tighter supply may begin to be priced in.
Opec and Russia may consider easing their production cuts before, or no later than at, their joint meeting on June 23: Argus Media yesterday reported that Saudi Arabia, Russia and the president of Opec are likely to meet this week to discuss a controlled relaxation of the over-compliance caused by the continued slump in Venezuelan production.
The US may struggle to achieve the desired impact on Iranian oil exports given the lack of support from other members of the 2015 nuclear deal
During the past week, instead of triggering additional momentum buying above $80/b, sellers emerged to knock it straight back below. Geopolitical risks are likely to keep a relatively solid floor under the market. But the recent price behaviour could indicate the market is getting ready to consolidate with $77.50/b being the first level of support.
Watch what people do, not what they say: Hedge funds have been net-sellers of crude oil for the past four weeks with the net-long dropping to a five-month low:
Focus today is on the weekly EIA report at 14:30 GMT. Crude stocks are surveyed to have dropped by 2m barrels last week. Gasoline, meanwhile, trades lower as a record fund long reacted negatively to the surprise counter-seasonal rise reported by the API last night.