Crude oil prices rose early Tuesday, as the strike by oil workers in Kuwait and outages in other parts of the world have renewed hope of a smaller global glut. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK6, +1.63% traded at $40.01 a barrel, up $0.23, or 0.6%, in the Globex electronic session. June Brent crude LCOM6, +1.77% on London's ICE Futures exchange rose $0.15 to $43.07 a barrel. The nationwide strike in Kuwait paralyzed around 60% of the country's production on Sunday. Other than chronic outages in Yemen, South Sudan and Iraq, major pipeline outages in Nigeria and oil strikes in Kuwait, have substantially curtailed production in recent weeks, said BMI Research. The strike could potentially result in output falling to 1 million barrels a day, the research firm said. Kuwait produced 2.7 million barrels a day in March, based on data provided by the Organization of the Petroleum Exporting Countries. Prices fell almost 7% on Monday after a deal that would have limited future crude production between major Organization of the Petroleum Exporting Countries and non-OPEC countries was thwarted at the last minute on Sunday upon Saudi Arabia's blatant refusal to join the pact without Iran's commitment to do the same. "So the stage looks set for ongoing competition for market share between Saudi Arabia and Iran, at least until Iran's output approaches capacity," said Tim Evans, a Citi Futures analyst. The latest mounting discord underscores the mistrust among OPEC members and stokes questions among analysts of the cartel's ability to collaborate in the future. Market watchers say OPEC's biannual June 2 meeting is unlikely to yield a production cap agreement as member countries will act on their own self-interest and continue to pump at high rates to defend market shares. ING's head of commodity strategy Hamza Khan predicts a failure to reach a production cap agreement in the June meeting could push prices back $30 a barrel. For this week, traders will be watching the U.S. crude inventories and production data for cues on global supply. The U.S. has these days become the swing producer in global oil markets, thanks to the shale revolution. However, the persistent low prices have encouraged some producers to turn off their taps. Pricing agency Platts estimates a 1.6-million barrel increase in crude stocks while gasoline stocks fell by 1.5 million barrels in the week ended April 15. The official data will be released on Wednesday. Nymex reformulated gasoline blendstock for May RBK6, +1.50% — the benchmark gasoline contract — rose 14 points to $1.4379 a gallon, while May diesel traded at $1.2363, 4 points higher. ICE gasoil for May changed hands at $368.50 a metric ton, down $1.75 from Monday's settlement.
