Yemisi Izuora
Oil prices rose on Wednesday in advance of a meeting of Organization of Petroleum Exporting Countries, OPEC, and its allies to discuss whether to extend production curbs to support the market and following industry data showing that US crude stockpiles fell more than expected.
Consequently, Brent crude futures were up 28 cents, or 0.5 per cent, at $61.10 a barrel while the US West Texas Intermediate (WTI) crude futures were up by 27 cents, or 0.5 per cent, at $56.37.
The OPEC and allies that include Russia a group known as OPEC+ are preparing to approve deeper crude output cuts this week, when they meet in Vienna, according to Iraq, the group’s second-biggest producer.
Thamer Ghadhban, the oil minister of Iraq, told reporters on Tuesday in Vienna that “a deeper cut is being preferred by a number of key members”.
There is still some scepticism in the market over whether Opec will cut output further, however, with many analysts expecting only an extension of existing cuts.
“We think OPEC could announce an extension to supply cuts to cover the whole of 2020 rather than the three to six months the market is currently factoring in,” BNP Paribas Markets said in a note.
An extension “with an option to review policy at the next meeting, would send a strong message of commitment by signatories of the Declaration of Cooperation,” the BNP Paribas analysts said.
OPEC members will meet on Thursday and then on Friday the OPEC+ group would equal meet.
The OPEC+ has been curbing supply since 2017.
On the supply side, crude inventories in the US fell by more than expected last week, according to the industry group American Petroleum Institute API. Stockpiles of crude oil fell by 3.7 million barrels, more than double expectations of a decline of 1.7 million barrels.
Keeping a lid on prices are the dwindling prospects of a trade deal between the United States and China.
US President Donald Trump said on Tuesday an agreement between the two may have to be delayed until after the American presidential election in November 2020.