Oil settles at $48.66, down 19 cents, as traders await data on US crude stockpiles

Oil prices were little changed on Tuesday as the market awaited direction from weekly U.S. inventory data and despite Kuwait joining top producers Saudi Arabia and Russia in support of prolonging supply cuts through March 2018.

"We expect a rangebound trade today with prices largely confining to yesterdays parameters as the market awaits another round of weekly stats," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

U.S. crude oil inventories were expected to fall by around 2.3 million barrels during the week ended May 12, according to a Reuters poll. That would be crude's sixth straight weekly decline after hitting a record high at the end of March.

The American Petroleum Institute was scheduled to release data for last week at 4:30 p.m. EDT (2030 GMT) on Tuesday, with the U.S. Energy Information Administration report due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures ended Tuesday's session 19 cents lower at $48.66 a barrel. Brent crude futures fell 13 cents to $51.69 per barrel by 2:33 p.m. ET (1833 GMT). Both benchmarks have risen more than $5 since hitting five-month lows 11 days ago.

Analysts warned CNBC this week that the oil market is vulnerable to profit-taking after crude futures rapidly retraced big losses in recent weeks.

Kuwait's oil minister, Essam al-Marzouq, backed the previous day's agreement by Saudi Arabia and Russia on the need to extend a crude output cut by OPEC and other producing countries of 1.8 million barrels per day (bpd) until the end of March next year. Other OPEC states are expected to support the move at a meeting on May 25.

However, there is no final deal yet despite the pledge by Saudi Arabia — the world's top exporter and de-facto leader of the Organization of the Petroleum Exporting Countries — and top producer Russia. The 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

"It remains to be seen whether all countries participating in the deal will agree with the Saudi-Russian stance," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Iraq is committed to reducing oil production to decrease a glut in the global market, and will support extending output cuts in line with any OPEC decision, Prime Minister Haider al-Abadi said on Tuesday. However, Abadi did not specify for how long Iraq was willing to extend the current cut.

James Woods, investment analyst at Australia's Rivkin Securities said that oil supplies would likely remain plentiful despite an extended cut.

"As we have seen over the past six months, rising U.S. production and record inventories have kept upside limited and a nine month extension at this stage is unlikely to break that."

U.S. bank Goldman Sachs said the deal "will likely further extend the oil price rebound... although the rally so far... has remained modest compared to the move that occurred last year when the OPEC cuts were first announced."

Prices are up nearly 3 percent since the announcement of the planned extension on Monday, compared with an over 15 percent jump in the two days following the announcement of the initial cut on Nov. 30, 2016.

Goldman Sachs said output would increase from OPEC members that were exempt from the cuts. Libya and Nigeria, which have faced disruptions to production, were excluded from limits on their output.

In addition, U.S. oil production is rising quickly and now up more than 10 percent since mid-2016 at 9.3 million bpd.

"These combined volumes could largely offset the benefit of the extended cuts," Goldman Sachs said.

Goldman kept its average Brent price forecast for the third quarter of 2017 at $57 per barrel.

— CNBC's Tom DiChristopher contributed to this report.