Oil prices edged higher on Tuesday as investors weighed positive demand indicators while also remaining cautious ahead of an OPEC+ meeting to decide the group's output policy in August.

Brent crude rose 18 cents, or 0.3%, to $66.92 a barrel by 11:36 a.m. ET (1536 GMT), while U.S. West Texas Intermediate crude rose 27 cents, or about 0.4%, to $65.38 a barrel.

The gains were likely driven by supportive data from a private sector survey in China, which showed factory activity picked up again in June, said Randall Rothenberg, risk intelligence strategist at U.S. oil broker Liquidity Energy.

Expectations that Saudi Arabia will raise August crude prices for Asian buyers to a four-month high, and strong premiums for Russia's ESPO Blend crude, also supported the idea of ​​strong demand, Rothenberg said.

Meanwhile, oil prices were kept in check by expectations that the OPEC+ group will raise crude output in August by a similar amount to the big increases agreed in May, June and July. Four OPEC+ sources told Reuters last week that the group plans to raise output by 411,000 barrels per day next month when it meets on July 6.

"All eyes will be on the OPEC+ decision over the weekend, when the group is expected to add 411,000 barrels per day in a bid to gain more market share, especially over U.S. shale producers," StoneX energy analyst Alex Hodes wrote to clients.

In addition to gaining market share from U.S. shale producers, which pumped oil at a record pace in April according to official data released on Monday, the group has also tried to punish members who overproduce.

OPEC+ member Kazakhstan, one of the world's 10 biggest oil producers, raised oil output last month to match an all-time high, sources familiar with the data told Reuters on Tuesday.

Saudi Arabia, the de facto leader of the OPEC+ group, raised crude exports in June to the fastest pace in a year, data from Kpler showed.

"These exports are flowing out even faster than implied by the OPEC+ deal during the summer when peak domestic demand typically keeps oil supplies closer to home," Hodes said. Investors are also keeping a close eye on trade negotiations ahead of U.S. President Donald Trump's July 9 tariff deadline.

U.S. Treasury Secretary Scott Bessent has warned that countries could be told much higher tariffs, opens new tab despite good-faith negotiations as that deadline approaches, when tariffs are scheduled to revert from the temporary 10% level that Trump announced on April 2 and then suspended.

The European Union wants immediate relief from tariffs in key sectors as part of any trade deal with the U.S. that is due by the July 9 deadline, EU diplomats told Reuters.

Morgan Stanley expects Brent crude futures to return to around $60 early next year, with markets well supplied and geopolitical risks easing following the de-escalation of the Israel-Iran conflict. They forecast a supply glut of 1.3 million barrels per day by 2026. (alg)

Source: Reuters