Crude oil prices rose on Thursday ahead of the OPEC+ meeting where major oil producers will decide on the production quota for May amid oil demand uncertainties from rising virus cases that are forcing European countries to take stricter mitigation measures.
International benchmark Brent crude was trading at $63.63 per barrel at 0645 GMT for a 1.41% increase after closing Wednesday at $62.74 a barrel.
American benchmark West Texas Intermediate (WTI) was at $60.04 per barrel at the same time for a 1.48% rise after it ended the previous session at $59.16 a barrel.
Members of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries, known as OPEC+, are scheduled to meet later on Thursday.
“We expect OPEC+ to roll over production quotas from April to May, and Saudi Arabia to extend its 1.0 mb/d [million barrels per day] unilateral cut,” Helge Andre Martinsen, a senior oil analyst at DNB Markets, said in a report.
Recalling the surprise outcome of the two previous OPEC+ meetings towards a bullish direction, Martinsen warned “the oil market is currently facing something of a paradox, with Brent prices above US$60 per barrel but at the same time the world having ample spare production capacity.”
“The bar has been raised ahead of this meeting, and any easing of production cuts will lead to a negative oil price reaction,” Martinsen added.
Meanwhile, OPEC Secretary-General Mohammad Barkindo said during Wednesday’s Joint Ministerial Monitoring Committee (JMMC) that the vaccine rollout and large fiscal stimulus in some countries were encouraging for economic recovery and oil demand, but added: “uncertainties remain.”
According to Barkindo, these uncertainties include “the prevalence of COVID-19 variants; the uneven rollout of vaccines; further lockdowns and third waves in several countries; and inflationary pressures and central bank responses.”
The group is currently reducing its production by 7.9 billion bpd.
-US crude stocks fall
Exerting upward pressure on oil prices, US crude oil inventories declined last week, signaling a crude demand rebound in the US, the world's largest oil consumer.
US commercial crude oil inventories fell by 900,000 barrels, or 0.2%, to 501.8 million barrels, relative to the market expectation of a build of 400,000 barrels, according to data released by the country's Energy Information Administration (EIA) on Wednesday.
By Sibel Morrow