When a futures market is in contango, contracts for prompt delivery are less than for future delivery, suggesting the market is well supplied in the near term or that demand for oil is greater in the future.Oil prices were little changed in early trading on Tuesday, awaiting further price direction from OPEC's monthly report after China's stimulus plan and oversupply concerns took the wind out of markets in prior sessions.
Brent crude futures fell 1 cent to USD 71.82 a barrel, by 0158 GMT. U.S. West Texas Intermediate crude futures were at USD 68.07 a barrel, up 3 cents.
Both contracts had fallen by more than 5% over the previous two trading sessions. China on Friday unveiled a 10 trillion yuan (USD 1.40 trillion) debt package to ease local government financing strains, but analysts said it fell short of the amount of stimulus that would be needed to boost growth.
Further price direction will come from the Organization of Petroleum Exporting Countries (OPEC) monthly report due to be released later on Tuesday. The market will be looking out for further downward revisions in demand from the group's outlook through 2025, which would add to downward pressure on prices.
"Prompt time spreads for Brent and WTI have collapsed recently, moving closer to contango, suggesting a better-supplied physical market," ING analysts said in a note.
The U.S. dollar closed higher on Monday as markets braced for further signals from U.S. inflation data and Federal Reserve speakers this week.
That makes commodities denominated in the U.S. currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices.
