OPEC Meetings; Oil Increase Helped Cut U.S. Inventories
OPEC and its partners’ meeting is just right around the corner. Producers expected them to extend output curbs to support the market. Oil increased today while the U.S. crude stockpiles dropped more than anticipated, which helped to lift prices.
Brent crude futures surged 44 cents, or 0.7%, at $61.26 a barrel.
U.S. West Texas Intermediate crude futures increased by 38 cents, or 0.7%, at $56.48.
The OPEC+ and Russia are preparing to acknowledge deeper crude production cuts this week at their Vienna meeting, according to Iraq.
The oil minister of Iraq told reporters in Vienna that some key members prefer a deeper cut.
There is still doubt in the market whether OPEC will reduce output further. Thus, it is accepted that the group is keen to support prices, with many analysts anticipating an extension of existing declines.
The chief Asia market strategist at AxiTrader said amid the trade war uncertainty, OPEC will be even more sure to maintain a floor on oil prices. They will work to deliver precisely for the outcome they want.
OPEC members and Russia will meet on Thursday and Friday in Vienna. OPEC+ has been cutting supply since 2017, and investors expect to keep the cuts in place to balance out record output in the U.S.
U.S. crude oil inventories decreased by more than expected last week, according to the industry group API. Stockpiles of crude oil dropped by 3.7 million barrels, more than double anticipations of a decrease of 1.7 million barrels.
However, gasoline and distillate stocks surged. Also, the market will seek confirmation of the crude draw when official numbers come out from the U.S. DEIA.
Keeping a roof on prices is the fall prospects of a trade deal between the U.S. and China.
OPEC Cuts Loom While Oil Continue to Surge
Oil prices continue to trend higher in Asia as traders are looking forward to the upcoming meeting of OPEC+ and the possible supply cuts to shore up prices.
Crude Oil WTI Futures increased by 0.55% to $56.41 a barrel. It continued on an upward trend this week.
Brent Oil Futures surged lightly by 0.13%, to $61.16 a barrel after two days of a surge.
Members of OPEC and its allies (OPEC+) are scheduled to meet on Friday. On Thursday, OPEC members will gather in Vienna and Saudi Arabia, pushing to cut supplies to increase prices.
Some key partners within OPEC prefer a more profound decline, according to the Iraqi Oil Minister Thamer Ghadban. Also, Saudi Arabia prefers a further cut, according to Reuters.
Top non-OPEC producer Russia also recommended that it is not impossible to agree with OPEC.
A deal currently in place calls for producers to carefully cut their production by 1.2 million bpd, which costs about 1.2% of global supply. Ghadhban recommended on Sunday that another 400,000 bpd could reduce output.
On Monday, Saudi Arabia increased prices for crude destined for Asia in January to the highest peak in six years.
Prices will possibly drop next year as oil supplies keep increasing, outweighing any pick-up in growth, according to Fitch Solutions. It assumed Brent crude would fall to a total of $62 a barrel in 2020 and $58 in 2021, from a $64 overall this year.