Oil prices at three-month highs ahead of Opec meeting
Oil prices closed in on three-month highs this afternoon amid expectations that major producers would agree to extend record production cuts at this week’s Opec meeting.
The oil producer cartel and allies including Russia are now set to meet on 4 June to discuss maintaining the curbs, which amount to 9.7m barrels per day.
As a result, global standard Brent crude rose 1.5 per cent to break the $39 mark, the first time prices have been so high since early March.
US benchmark West Texas Intermediate also rose nearly one per cent to close in on $36 at $35.88.
The last six weeks have seen crude oil prices rally sharply after April’s historic volatility sent WTI into the negative and Brent to trade at pre-millenium levels.
The rally has been helped by Opec’s cuts, which account for roughly 10 per cent of total global oil production.
Gains were briefly capped by growing tension between the US and China over Beijing’s attempts to impose a national security law on the semi-autonomous city.
Rystad Energy’s head of oil markets Bjornar Tonhaugen said that increased demand as the world emerges from coronavirus enforced lockdowns were also driving prices up.
He said: “Opecc+ cuts are clearly working with solid help from recovering crude oil demand, especially in Asia.
“An extension of the current cut levels will definitely be a further boost for the market. Not only will the market rebalance, but stock builds of oil will also feel some relief. Prices rise on this prospect and are set for higher levels if the cuts are indeed extended”.
Citi’s head of commodities research Edward Morse said that Opec was likely to extend the current cuts until September, with further steps to be taken then.