Oil prices broadly stable ahead of OPEC+ meeting

Oil prices were broadly stable on Thursday ahead of talks between the Organisation of the Petroleum Exporting Countries (OPEC) and its allies on whether to ease production cuts and after a record jump in US crude oil stocks following Texas refinery outages.

Brent crude futures were up $0.14, or 0.2%, at $64.21 a barrel by 1250 GMT while US West Texas Intermediate (WTI) crude rose $0.25, or 0.4%, to $61.53, with both contracts moving in and out of positive territory.

Analysts and traders say a four-month price rally from below $40 a barrel is now out of step with demand and that physical sales are not expected to match supply until later in 2021.

Still, with prices above $60, some analysts have predicted OPEC+ producers will increase output by about 500,000 barrels per day (bpd) and expect Saudi Arabia to at least partially end its voluntary reduction of one million bpd.

Three OPEC+ sources on Wednesday said some members believe that output should remain unchanged and that it was not immediately clear whether Saudi Arabia would end its voluntary cuts or extend them.

“The market … can take back at least 500,000 bpd (excluding Saudi Arabia’s extra cuts) from April and even more in following months, in line with the recovery we expect in oil demand,” said Rystad’s Head of Oil Markets Bjornar Tonhaugen.

“Some mild negative price reaction will take place, though, if the decision is to increase output. Such a development would prevent some steep stock draws that had been priced in for a while for coming months.”

In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.

Giving a floor to prices, Yemen’s Houthi forces said on Thursday that they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Red Sea city of Jeddah. There was no immediate confirmation from Saudi authorities.