By Adedapo Adesanya
Oil prices rose on Tuesday, April 27 as the market got fresh optimism from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) which plans to stick to existing plans to boost oil output slightly from May 1.
As a result, the Brent crude settled 1.17 per cent or 45 cents higher at $66.42 per barrel, while the West Texas Intermediate (WTI) crude advanced 1.63 per cent or 56 cents to settle at $62.97 per barrel.
There are reports that the group may not hold a full ministerial meeting planned for Wednesday but since a technical committee met on Monday about surging COVID-19 cases, it does not see a lasting effect as it kept its oil demand forecast unchanged.
In recent days, surging cases in the world’s third-largest importer, India had weighed on prices but the signal on Tuesday may mean the alliance is choosing to see the problem as short term and from next month, OPEC+ will slightly ease oil output cuts under a plan agreed before the coronavirus surge.
Record OPEC+ supply cuts last year helped to drive a recovery in prices from historic lows and although a large percentage of the curbs are still in place, they will be gradually lifted over time depending on a number of factors.
The market is facing rising inventories as the American Petroleum Institute (API) on Tuesday reported an extensive build in crude oil inventories of 4.319 million barrels for the week ending April 23.
Analysts had predicted a much smaller build of 659,000 barrels for the week.
In the previous week, the API reported a build in oil inventories of 436,000 barrels after analysts had predicted a draw of 2.860 million barrels.
This will be confirmed by the government-backed Energy Information Administration (EIA) and if inventories do rise during the review period, the market will likely return to the bearish territory.
In another development that could eventually add supply to the market, talks in Vienna aimed at reviving the 2015 Iran nuclear accord have resumed. If things sway in the way of the Gulf country, its oil will flow into the global market likely leading to an oil glut.
