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Oil prices rose on the eve of the meeting between OPEC and its allies, as investors bet producers would largely agree to extend their supply restrictions until May.
OPEC + has raised concerns that the increase in the number of coronavirus infections worldwide and the lockdown measures will have an impact on the recovery in oil demand, according to a report from the meeting of the group of experts seen by Reuters.
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Brent futures contracts for May, which expire Wednesday, rose 32 cents, or 0.5%, to $ 64.46 a barrel at 5:25 am GMT, after falling 1.3% on Tuesday. The more active Brent contract for June rose 25 cents, or 0.4%, to $ 64.42 a barrel.
The benchmark is down 2.5% so far this month, up from an 18% rise in February.
US West Texas Intermediate (WTI) crude futures rose 26 cents, or 0.4%, to $ 60.81 a barrel, after falling 1.6% in the previous session.
“OPEC + is expected to show supply discipline,” Commonwealth Bank commodities analyst Vivek Dhar said.
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The Organization of the Petroleum Exporting Countries and its allies, called together OPEC +, are due to meet on Thursday, after a month in which oil prices whipped up concerns over the extension of pandemic lockdowns in Europe, the slow deployment of vaccines and increasing COVID-19 cases in India and Brazil, opposed to growing optimism about growth in the United States.
Last month, OPEC + surprised the market by agreeing to extend supply restrictions, with a few exceptions for Russia and Kazakhstan, at a time when demand for fuel appeared to be picking up.
“All eyes will be on the OPEC + meeting for May production decisions and given the surge in COVID-19 cases and lockdowns being implemented in parts of Europe, and the dollar strength, this could put pressure on prices an additional 2-3%, ”said Sunilkumar Katke, head of currencies and commodities at Axis Securities.
“We also expect supply to ease somewhat from May, as the production reduction extensions have already been stretched from previously planned levels.”
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Under existing restrictions, Saudi Arabia-led OPEC and Russian-led non-OPEC producers reduced just over 7 million barrels per day (b / d) , while Saudi Arabia made a further voluntary reduction of 1 million bpd.
Saudi Arabia is ready to support an extension of supply cuts until June, including its own voluntary cut, to raise prices, a source briefed on the matter told Reuters this week.
Adding to opinion that the producer group should withhold the offer, data released Tuesday by the American Petroleum Institute showed that U.S. crude oil inventories rose 3.9 million barrels in the week of March 26. , well above analysts’ forecasts in a Reuters poll for a construction of around 100,000 barrels.
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US inventory data is due from the US Energy Information Administration on Wednesday.
(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Richard Pullin & Simon Cameron-Moore)
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