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 settled up 37 cents, or 0.6%, at $67.11 a barrel, while U.S. West Texas Intermediate crude settled up 34 cents, or about 0.5%, at $65.45 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 expert at U.S. oil brokerage Liquidity Energy.

Expectations that Saudi Arabia will raise its crude prices in August for Asian buyers to a four-month high as well as strong premiums for Russia's ESPO Blend crude also support the idea of ​​strong demand, Rothenberg said. Oil prices have been held back 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 increase 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, particularly over U.S. shale producers," StoneX energy analyst Alex Hodes told 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, increased 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 its 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 high domestic demand typically keeps oil supplies closer to home," Hodes said.

Investors are also watching trade negotiations ahead of U.S. President Donald Trump's July 9 tariff deadline. Trump said Tuesday he is not considering extending the deadline.

A trade deal with India is very close, Treasury Secretary Scott Bessent said Tuesday. Trump has also said the U.S. may reach a deal with India, but he added that he doubts there will be a deal with Japan.

Bessent also warned that countries could be told much higher tariffs, opens new tab despite good-faith negotiations ahead of the July 9 deadline, when tariffs are scheduled to return from a temporary 10% level to the level Trump announced on April 2 and then suspended.

The European Union wants immediate tariff relief in key sectors as part of a trade deal with the US, EU diplomats told Reuters. (alg)

Source: Reuters