Oil up as OPEC+ considers production cut rollover

Signs of progress in coronavirus vaccine rollout in US give further support

LONDON:

Oil prices rose on Wednesday, boosted by expectations that OPEC+ producers might decide against increasing output when they meet this week, while signs of progress in the coronavirus vaccine rollout in the United States gave further support.

Brent oil was up $1.28, or 2%, to $63.98 a barrel by 1050 GMT. US West Texas Intermediate (WTI) crude rose $1.17, or 2%, to $60.92 a barrel.

“The fundamentals of the oil market suggest further strength as oil demand grows with the recovery and leisure and travel activity is likely to bounce,” said Norbert Rucker, analyst at Swiss bank Julius Baer. “We see oil prices pushing temporarily above $70 by mid-year,” he added.

Oil prices jumped after Reuters reported based on three sources that the Organisation of the Petroleum Exporting Countries, Russia and their allies, a group known as OPEC+, are considering rolling over production cuts from March into April rather than raising output.

The group meets on Thursday. The market had been widely expecting OPEC+ to ease production cuts.

Kuwaiti Oil Minister Mohammad al-Fares said the oil market was being supported by optimism about vaccinations.

US President Joe Biden said the United States would have enough Covid-19 vaccines for every American adult by the end of May, after Merck & Co agreed to make rival Johnson & Johnson’s inoculation.

Biden said he hoped that the United States would be “back to normal” at this time next year and potentially sooner.

The American Petroleum Institute (API) industry group reported US crude stocks rose by 7.4 million barrels in the week to February 26, in stark contrast to analysts’ estimates for a draw of 928,000 barrels.

However, that build occurred while US refining capacity was shut during the survey week because of cold weather in Texas. Refinery runs fell by 1.75 million bpd, API data showed.