Oil up as OPEC+ meets to decide on production policy

Oil prices rose on Thursday on optimism about the strength of US and European economies and hopes that OPEC and its allies will keep production curbs in place.

Brent crude rose by $1.33, or 2.1%, to $64.07 a barrel by 1023 GMT. US oil was up $1.36, or 2.3%, at $60.52 a barrel.

Ministers from the Organisation of the Petroleum Exporting Countries, Russia and other allied producers, a group known as OPEC+, meet on Thursday to reassess output policy.

OPEC+ will debate options from May and beyond, including a rollover of existing cuts and a gradual increase of production, three OPEC+ sources said.

OPEC+ has reduced output by about 7 million barrels per day (bpd) to support prices and reduce oversupply. In addition, Saudi Arabia made an extra 1 million bpd voluntary cut.

“Given the recent wobble in prices, along with demand concerns re-emerging once again, there is a growing consensus that the OPEC+ will likely roll over current cuts for an additional month,” ING analyst Warren Patterson said.

OPEC+ has trimmed its oil demand growth forecast for this year by 300,000 bpd because of renewed lockdowns.

France entered its third national lockdown and schools closed for three weeks to push back a third wave of Covid-19 infections.

Despite the new wave, European markets have recovered most of their pandemic-driven losses on strong manufacturing activity.

March data showed euro zone factory activity growth galloped at its fastest pace in the history of the survey.

Oil also found some support in US economic strength after President Joe Biden outlined a $2.3 trillion spending plan to invest in traditional projects such as roads and bridges alongside tackling climate change.

US crude stocks fell unexpectedly last week, helping support oil prices, the US Energy Information Administration data showed.

“The inventory data ... showed that the situation is continuing to normalise on the US oil market,” Commerzbank analyst Eugen Weinberg said.