Oil prices top $40 for first time in three months ahead of Opec meeting
Global oil prices touched $40 per barrel for the first time since March today amid hopes that producer cartel Opec would extend its record production cuts.
Having reached the $40 mark earlier this morning, global standard Brent crude slipped back to $39.27 as midday approached.
US benchmark West Texas Intermediate also gained to $36.83, approaching its highest levels in three months.
The Opec group of oil producing countries is set to meet tomorrow along with key partners such as Russia to discuss an extension to the cuts made earlier this year.
Currently, the alliance is curbing 9.7m barrels of oil per day, roughly 10 per cent of total global production.
In the last six weeks prices have rallied strongly, with Brent crude more than doubling after it hit pre-millenium levels of $16 in April.
WTI, which flipped into the negative for the first time in history in the same month, has also gained consistently, helped by a rise in demand as the world begins to emerge from lockdown.
Bjorner Tonhaugen, head of oil markets, said that today’s price build was normal before one of Opec’s meetings.
He said: “Seeing the bigger picture, today’s price boost is the usual price build-up before a major meeting.
“More often than not, in anticipation for an OPEC+ meeting, prices rise in times of crisis, as most traders always expect that producing countries will agree on a bullish development.
“It doesn’t always work this way of course, but the days before the meeting are always sprinkled with enthusiasm and rumors, and this case is no different”.
“A consensus is emerging that the producer group will prolong current cuts,” said Stephen Brennock of oil broker PVM.