Oil prices dip as market awaits EIA report

HOUSTON (Reuters) -Oil prices dipped on Tuesday as traders watched for a U.S. government short-term market outlook report following a bullish report on demand and supply issued by OPEC.

Brent crude futures lost 20 cents, or 0.3%, to $66.43 a barrel by 10:36 a.m. CDT (1536 GMT). U.S. West Texas Intermediate crude futures were off by 39 cents, or 0.61%, to $63.51.

"We're still locked into a range, waiting for an Energy Information Administration report this morning," said Phil Flynn, senior analyst at Price Futures Group.

Flynn said traders were watching to see if the EIA report would track with a report issued earlier on Tuesday by OPEC on its demand and production outlook.

The Organization of the Petroleum Exporting Countries raised its forecast for global oil demand next year and trimmed its forecast for growth in supply from the United States and other producers outside the wider OPEC+ group, pointing to a tighter market outlook.

OPEC's monthly report on Tuesday said global oil demand will rise by 1.38 million barrels per day in 2026, up 100,000 bpd from the previous forecast. Its 2025 projection was left unchanged.

U.S. President Donald Trump extended a tariff truce with China to November 10, staving off triple-digit duties on Chinese goods as U.S. retailers prepared for the critical end-of-year holiday season.

This raised hopes that an agreement could be reached between the world's two largest economies and avert a virtual trade embargo between them. Tariffs risk slowing global growth, which could sap fuel demand and drag oil prices lower.

U.S. consumer prices increased in July as tariff-induced rising costs for imported goods helped to drive the strongest gain in six months for one measure of underlying inflation.

Also potentially weighing on the oil market, Trump and Russian President Vladimir Putin are due to meet in Alaska on Friday to discuss ending Russia's war in Ukraine.

The U.S. has stepped up pressure on Russia to end the conflict, with Trump setting a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions. He has also pressed India and China to reduce their purchases of Russian oil. 

"If Friday's meeting brings a ceasefire or even a peace deal in Ukraine closer, Trump could suspend the secondary tariffs imposed on India last week before they come into force in two weeks," Commerzbank said in a note.

"If not, we could see tougher sanctions against other buyers of Russian oil, like China."

(Reporting by Erwin Seba; Additional reporting by Ahmad Ghaddar and Robert Harvey in London, Anjana Anil in Bengaluru and Emily Chow in SingaporeEditing by Jan Harvey, David Goodman, Rod Nickel)