By Adedapo Adesanya
Oil prices rose by more than $1 a barrel on Wednesday as investors focused their attention on an upcoming OPEC+ output policy meeting and looked past a jump in crude stockpiles in the United States.
Brent crude futures were up by $1.01 or 1.2 per cent to $82.69 per barrel, and the US West Texas Intermediate (WTI) crude futures gained $1.16 or 1.5 per cent to close at $77.57 a barrel.
Prices were lifted by a media report that the Organisation of the Petroleum Exporting Countries and allies such as Russia, known collectively as OPEC+, was considering new oil production cuts of as much as 1 million barrels a day.
The Wall Street Journal (WSJ) reported that the 23-nation alliance was considering new oil production cuts, which could be announced on Thursday at a virtual meeting of the cartel.
The OPEC+ policy meeting and news surrounding its outcome is likely to be the main driver for oil price fluctuations in the near term, analysts noted.
ING analysts, meanwhile, cautioned that OPEC may delay its meeting yet again if it fails to reach an agreement on policy in advance after the first postponement happened due to internal disagreement. If the meeting is delayed again, prices will likely fall.
The market remained positive as a storm continued to disrupt crude loadings in the Black Sea. It has disrupted up to 2 million barrels per day of oil exports from Kazakhstan and Russia.
The disruption is expected to lower Kazakhstan’s oil production by 631,700 metric tons this week, its government said, adding that it was unclear when the situation would return to normalcy.
On its part, Russian oil companies are expected to re-route most of their volumes to Baltic ports for December while it won’t be the same for Kazakhstan which doesn’t have many alternative export routes for its oil.
The Energy Information Administration (EIA) reported an estimated inventory increase of 1.6 million barrels for the week to November 24.
This compared with a sizeable build for the previous week, at 8.7 million barrels, which pushed prices lower last week, contributing to other bearish factors.
A day earlier, the American Petroleum Institute (API) estimated a crude oil inventory dip of a little over 800,000 barrels for the week to November 24.
