Oil steadied near $60 a barrel after a three-day fall with the OPEC+ alliance said to be poised to agree an output increase at its meeting this week, a sign of the market’s resilience as the impact of the pandemic ebbs.
West Texas Intermediate was just 0.3% lower, while Brent was steady. The widespread view among the producer group is that the market can absorb additional barrels, according to people familiar with the matter.
Also Read | How citizen data led India’s Covid battle
Oil has staged a powerful rally this year following significant OPEC+ supply curbs, including unilateral reductions by Saudi Arabia, and the vaccine-aided rebound in activity. That strengh has paved the way for the alliance to return some barrels, with OPEC Secretary-General Mohammad Barkindo saying on Tuesday that both the global economic outlook and oil market continue to show signs of improvement. The producer grouping could return the bulk of the 1.5 million barrel-a-day output hike that’s up for debate this week.
“Tomorrow is an important day but it’s very much unclear how much OPEC will add to the supplies," said Howie Lee, an economist at Oversea-Chinese Banking Corp. “I don’t think the Saudi’s will return their additional cuts fully."
There are two distinct elements to the production increase that the Organization of Petroleum Exporting Countries and it allies will address. First, will the cartel proceed with a 500,000 barrel-a-day collective hike in April? Second, how will Saudi Arabia phase out its extra reduction of 1 million barrels a day it’s been making voluntarily in February and March?
Oil bulls may draw comfort from further signs the pandemic is ebbing. The daily case count in the US fell to on Monday to its lowest in more than four months, while economic indicators continued to improve. President Joe Biden said he hopes the country would be back to normal “by this time next year."
There are also signs of strength in Asia. Indian demand for gasoline, diesel and other fuels will reach a record in the 12 months through March 2022, according to estimates by the Petroleum Planning and Analysis Cell of the nation’s oil ministry. That’s almost a 10% rebound from the current virus-hit year.
U.S. crude inventories rose more than 7 million barrels last week, the American Petroleum Institute reported, according to people familiar. If confirmed by the official government tally, that would be the largest weekly build since December. Still, the API figures also showed drops in gasoline and distillates.
Shifts in Brent’s prompt timespread point to an easing of near-term tightness. It was at 52 cents a barrel in backwardation on Wednesday, the lowest reading since Feb. 11.
This story has been published from a wire agency feed without modifications to the text.
Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.