Oil Extends Gains Thanks to The Possibility of OPEC+ Sticking to Cutting Supplies

Oil prices rose for the second session in a row on Thursday, March 4, as they received support from the possibility of OPEC+ producers taking a decision against increasing production at an important meeting to be held later today, along with the decline in the US fuel stocks.

Brent crude futures added 53 cents, or 0.8%, to $64.60 a barrel, after rising more than 2% on Wednesday. US West Texas Intermediate crude futures gained 46 cents, or 0.8%, to $ 61.74 a barrel.

Three sources in OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, told Reuters that the group is considering extending production cuts until April instead of increasing production, as the recovery in oil demand is still fragile due to the Coronavirus crisis.

The market had expected OPEC to cut production cuts by about 500,000 bpd from April and for Saudi Arabia, OPEC’s largest producer, to end a voluntary production cut of an additional 1 million bpd.

City analysts said that the continued recovery of crude oil prices began to reveal the differences between OPEC+ countries, but they expected the group to reach a settlement on a nominal increase in production of 500 thousand barrels per day.

The bank expects Saudi Arabia to maintain its additional voluntary cut of 994,000 barrels per day, and to keep its share of production at 8.256 million barrels per day.

Prices received more support, as the Yemeni Houthi forces said they had fired a missile at a Saudi Aramco facility in the Red Sea city of Jeddah, but there has been no confirmation yet from the Saudi authorities.

In the United States, and despite a record-high crude oil inventory of more than 21 million barrels last week, gasoline stocks fell by the most in 30 years as refining activities plunged to their lowest level ever due to freezing weather in Texas, cutting electricity supplies to millions.

City analysts said the United States turned into a net importer of oil last week, with a quantity of 2.2 million barrels per day.