Oil prices increased on Wednesday on optimism that the markets are capable of absorbing extra barrels after major oil producers reaffirmed their decision to increase their output until July.
International benchmark Brent crude was trading at $70.48 per barrel at 07.14 GMT for a 0.32% gain after closing Tuesday at $70.25 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $67.86 a barrel at the same time with a 0.20% increase after ending the previous session at $67.72 per barrel.
Brent oil registered at over $70 a barrel soon after the OPEC+ meeting on Tuesday, as the group’s confidence over greater oil demand ahead of the summer driving season instilled hope of a more resilient oil market on the horizon.
The 23-members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to stick to its previously agreed production quota that requires the cartel to gradually boost output until July, citing “oil demand showing clear signs of improvement”.
The group had agreed to raise its production by 350,000 barrels per day (bpd) in May and June and 400,000 bpd in July. Saudi Arabia's additional production cut of 1 million bpd would also be gradually phased out with a production increase of 250,000 bpd in May, 350,000 bpd in June, and 400,000 bpd in July.
With the new output quota, the group's collective production will reach 5.8 billion bpd in July.
Exerting upward oil price pressure, the group pointed to the strengthening of market fundamentals, with oil demand showing clear signs of improvement and OECD stocks falling, as the economic recovery continues in most parts of the world with the acceleration of vaccination programs.
The economic recovery, especially in the US and China, the world's largest oil consumers, signals a rebound in oil demand ahead of the expected increase in mobility during the summer driving period.
By Sibel Morrow