By Adedapo Adesanya
Crude oil prices rose on Thursday as a result of the signals that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries (OPEC), including their allies known as OPEC+ are considering sustaining the present huge output cuts level till the end of 2020.
As a result, the Brent crude zoomed to the $35 mark after rising by 33 cents or 0.95 percent to trade at $35.07 per barrel, while the US West Texas Intermediate (WTI) crude gained 64 cents or 1.95 percent to trade at $33.45 per barrel.
OPEC and other producers led by Russia, a group known as OPEC+, agreed last month to cut output by 9.7 million barrels per day (bpd) in May and June.
After June, producers will slowly relax curbs and supply reductions will scale back to 7.7 million barrels per day from July until December.
Now, OPEC de-facto leader, Saudi Arabia and some other members are considering extending these cuts until the end of 2020, but are waiting for support from Russia, according to industry sources.
The group is set to meet next month to discuss the possibility of sustaining the current cuts rather than easing them from July when the level of production cut is set to decrease compared to cuts made by the producers in May and June.
The OPEC+ group is due to hold an online conference in the second week of June to discuss their output policy.
Also, Saudi Arabian Crown Prince Mohammed bin Salman and Russian President Vladimir Putin agreed during a phone call on Wednesday that the two nations will coordinate closely on further output arrangements.
Traders will be looking to OPEC and its partners to stabilize the oil market during this tough year for the market which had been affected largely by the coronavirus pandemic.
However, there are still worries from the United States and China tensions due to the latter’s new security law in Hong Kong which the former is vehemently against and has threatened an action.
There are speculations that that Washington could slam China with trade sanctions, which could affect oil prices.
It was observed that the report of increase in demand despite a big surprise build in crude inventories in the US supported prices yesterday.
The US Energy Information Administration (EIA) said crude inventories rose 7.9 million barrels in the latest week, exceeding expectations, due to a big increase in imports.
