By Jenny W. Hsu 

HONG KONG--Crude oil prices were little changed Monday as investors waited for cues from the Organization of the Petroleum Exporting Countries meeting Thursday, where the issue of oversupply is expected to take center stage.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July recently traded at $49.37 a barrel, up $0.04, while July Brent crude on London's ICE Futures exchange gained $0.10 to $50.05 a barrel.

Monday trading volume is expected to be low in Asia because of a public holiday in the U.S.

For nearly two years, a supply glut has dragged oil prices well below highs of about $100 a barrel. Major producers in and outside OPEC have expanded production in an effort to protect market share amid low prices. As a result, the world remains oversupplied and prices remain under pressure.

But thanks to several unplanned outages in Canada and Africa, about 3.5 million barrels of oil have been offline each day in recent weeks, pushing prices over $50 a barrel for the first time in six months on Thursday.

While some outages are coming to an end--Canada's Suncor Energy Inc. on Sunday said it had begun a "staged restart" of its operations--oil production in Nigeria remains precarious. According to the latest reports, a militant group that calls itself Niger Delta Avenger said it blew up a key production facility and an export terminal. Nigeria's output has already fallen to its lowest level since 2009.

In addition, crude production in the U.S. and China has also fallen because of slashed exploration budgets. On Friday, industrial service company Baker Hughes Inc. said the number of active U.S. rigs drilling for crude fell by two to 316 last week.

"Assuming that the U.S. oil rig count stays at its current level, U.S. oil production would decline by 750,000 barrels a day between fourth-quarter of 2015 and fourth-quarter of 2016," said Goldman Sachs in a note.

China's crude production fell 5.6% in April and a further decrease is expected.

Along with less, strong oil demand from China and India are also expected to soak up the some of the oversupply. BMI Research expects China's gasoline consumption will grow 6% from a year earlier in 2016, underpinned by robust growth in car ownership. Meanwhile, the International Energy Agency has dubbed India as the "star performer." India's oil demand in the first quarter of this year was 400,000 barrels a day higher compared with a year earlier, which represents nearly 30% of the global increase, the group said.

Still, participants remain skeptical about how long it would take for markets to skew to a rebalance, especially when major OPEC producers are accelerating output.

"The OPEC players will still struggle to cut production because there are many countries who are looking to get as much hard currencies as they can," said Alan Oster, chief economist at National Australia Bank.

Investors will also be watching U.S. oil data to be released Thursday instead of Wednesday because of Memorial Day.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

 

(END) Dow Jones Newswires

May 30, 2016 11:41 ET (15:41 GMT)

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