Crude Oil Price Rises on Hopes of Production Cuts
- OPEC, allies meet today
Crude oil prices strengthened ahead of their settlement yesterday, buoyed by hopes that the Organisation of Petroleum Exporting Countries (OPEC) and its allies will strike a production cut agreement, shrugging off bearish signals from surging US crude inventories.
The global benchmark crude, Brent crude was up $1, or three per cent, at $32.87; while US West Texas Intermediate (WTI) crude rose $1.55 cents to $25.18 a barrel.
Crude has collapsed in 2020 because of a slide in demand due to the coronavirus pandemic and excess supply. Brent dropped to $21.65, its lowest since 2002, on March 30.
Today’s video conference meeting between the OPEC and allies including Russia – a group known as OPEC+ – was expected to be more successful than their gathering in March, which ended in a failure to extend supply cuts and a price war between Saudi Arabia and Russia.
While OPEC sources have said a deal to cut production is conditional on the participation of the United States, doubts remain as to whether Washington will contribute.
The US Department of Energy said on Tuesday US output was already declining, without government action.
The benchmarks pared some of their gains, with Brent turning negative briefly, after US government data showed that crude inventories last week soared by a record 15.2 million barrels, even as production was cut by 600,000 barrels per day to 12.4 million bpd.