BENGALURU – Oil prices rose nearly 5% on Thursday on a possible extension of voluntary output cuts by Saudi Arabia into April, as OPEC ministers and their allies continued to deliberate about the future of supply cuts.

Oil up nearly 5% on possible extension of Saudi output cuts- oil and gas 360

Source: Reuters

Brent crude futures were up $3.04, or 4.7%, at $67.11 a barrel by 10:57 a.m. ET (1557 GMT), while U.S. West Texas Intermediate (WTI) crude rose $2.84 or 4.6% at $64.12.

Ministers from the Organization of the Petroleum Exporting Countries and its allies started a meeting at 1300 GMT to discuss the future of an oil output cut.

Saudi Arabia is considering extending its voluntary oil cuts of 1 million barrels per day by one month into April, an OPEC+ source told Reuters on Thursday.

“If that’s the outcome, then its a far cry from what the market was potentially looking for in a 1.5 million-barrel increase just a couple of days ago, so it’s a change that at least in the short term will reflect in a price bounce,” said Ole Hansen, head of commodity strategy, Saxo Bank.

Analysts and traders say a four-month price rally from below $40 a barrel is out of step with demand and that physical sales are not expected to match supply until later in 2021.

But with prices above $60, some analysts have predicted OPEC+ producers will increase output by about 500,000 barrels per day (bpd).

In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.

Also propping up sentiment, Yemen’s Houthi forces said they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Red Sea city of Jeddah. There was no immediate confirmation from Saudi authorities.

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