By Adedapo Adesanya
Crude oil prices pointed north on Tuesday as the market anticipates support for stable oil output from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) ahead of a meeting on Thursday.
The international crude benchmark, Brent, gained 33 cents or 0.51 per cent to trade at $64.47 per barrel while the US benchmark, West Texas Intermediate (WTI), went up by 0.18 per cent or 11 cents to sell at $60.64 per barrel.
The market has now looked beyond the Suez Canal issue and is turning its focusing on the upcoming OPEC+ meeting, where according to industry sources, producers will likely roll over the output cuts.
The 400-meter long container ship called Ever Given was tipped by strong winds and it went length-ways across the canal last Tuesday, causing a gridlock of at least 100 vessels. It has, however, been resolved.
With the focus now on the meeting, Saudi Arabia is prepared to support extending oil cuts and is also ready to prolong its own voluntary cuts to boost prices amid a new wave of coronavirus lockdowns.
After steady oil price gains earlier this year, OPEC+ had hoped to ease output cuts but a fresh wave of lockdowns, aimed to prevent a new surge in the virus, has pushed oil off this year’s highs.
By indications of past events, this would most likely encourage the group to extend cuts into May when it meets.
This will largely depend on non-OPEC leader in the alliance, Russia. The country favours a rollover of the alliance’s oil production cuts while seeking a slight increase for itself to meet higher seasonal demand.
Under existing curbs, OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have cut just over 7 million barrels per day while Saudi Arabia has made an additional voluntary reduction of 1 million barrels per day.
OPEC+ decided in January to give Russia and Kazakhstan small increases for February and March, keeping the overall production with no significant difference.
In each of those two months, Russia was set to ease its cuts by 75,000 barrels per day. For April, Russia was allowed to boost its production by 130,000 barrels per day, while the other members of the OPEC+ alliance including Nigeria are to keep their production flat next month.
The OPEC+ panel reviewing production and the market situation is set to meet on March 31, while the ministers will gather for their monthly online meeting on April 1 – where the decision will be announced.
The market faced pressure as the US Dollar rose against major currencies. This weighed on oil prices as a stronger greenback makes dollar-priced crude more expensive to buyers in other currencies.
Also, there are indications that crude inventories may rise in the United States, another pointer that could weaken prices.
Dipo Olowookere