Oil rises towards $66 ahead of OPEC+ meeting

Concern remains over India’s coronavirus crisis that can dent recovery in fuel demand

LONDON:

Oil rose towards $66 a barrel on Tuesday before a meeting of the producer group OPEC+ to discuss oil output policy amid concern India’s coronavirus crisis could dent a recovery in fuel demand.

Organisation of the Petroleum Exporting Countries (OPEC) and allies hold a monitoring meeting on Tuesday instead of Wednesday as had been planned. A technical meeting on Monday had voiced concern about surging Covid-19 cases but kept its 2021 oil demand forecast unchanged.

Brent crude was up $0.3, or 0.5%, at $65.95 a barrel by 1015 GMT, after dropping 0.7% on Monday. US oil also gained $0.3, or 0.5%, to $62.21.

“Traders do not want to miss out on a potential bullish OPEC+ meeting so a limited optimism is reflected in prices,” said Bjornar Tonhaugen of Rystad Energy. “Should OPEC+ turn a blind eye to India though, the gains may quickly evaporate.”

The group known as OPEC+ is set to slightly ease oil output cuts from May 1 under a plan agreed before the coronavirus surge in India, the world’s third-largest crude importer, which has recorded a daily rise of more than 300,000 cases for several days. It has also reported a total of almost 200,000 deaths.

Others expect OPEC+ to stick to its easing policy.

“We still expect that the group will announce no changes to its plan,” ING Economics analysts said in a note.

In another development that could eventually add supply to the market, talks in Vienna aimed at reviving the 2015 Iran nuclear accord were set to resume on Tuesday.

Record OPEC+ supply cuts last year have helped drive a recovery in prices from historic lows. Most of the curbs are still in place.

Also in focus this week will be the latest US oil inventory reports, which analysts expect will show a rise in crude stocks. The first report, from the American Petroleum Institute, is out at 2030 GMT.