Both Brent crude and WTI had commenced gains, capping up to 2% as at last Friday. Brent crude traded at $94.10 per barrel and WTI at $88.19 per barrel. All were in high expectations from an OPEC+ meeting holding today.
OEPC+ is meeting today is expected to discuss about production policies. Last Thursday, Russia said it would stop selling oil to countries that implement a price cap on its crude, adding upward pressure on prices provided G7 approves the cap.
Analysts explained that traders are reacting on the expectations that the OPEC and its partners meeting this week will approve production cuts.
The report said the pressure to oil prices enabled benchmarks recoup some of the losses incurred earlier in the week.
[Also Read] ‘No Formal Proposal Before OPEC+ To Cut Output’ – Agency
Saudi Arabia’s energy minister, Abdulaziz bin Salman, last month muted the idea of production cuts by OPEC+ producers. He said the paper market for oil had become disconnected from the physical market, implying prices had fallen too low for the actual supply situation.
“They will certainly try to talk up the market as much as possible to better reflect what they see as a tight market, which is exposed to further supply side issues,” ANZ commodity analyst Daniel Hynes told Reuters last Friday.
Salman however said an agreement on cuts was in no way a certainty. OPEC is already producing less than it was supposed to, per its own production agreement with the OPEC+ partners for reasons ranging from political instability to technical limitations.
[Also Read] OPEC+: Oil Output Rises But Still Below Target
In a report by the group’s Joint Technical Committee early last week, OPEC+ said the oil market would remain in surplus this year, at an annual level of 900,000 bpd. Demand is seen 400,000 bpd behind supply but the balance may move from surplus to deficit next year, the report said.
“We expect any reduction in supply from OPEC+ to have a material impact on oil prices given the very low inventory levels globally, limited capacity of supply alternatives and ongoing energy crunch in Europe,” Reuters also quoted Baden Moore from the Australian National Bank.
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