Oil prices climbed by more than$1 a barrel on Tuesday on hopes that major crude producers will agree to extend output cuts during a video conference expected to be held this week and as countries and U.S. states begin to reopen after coronavirus lockdowns.
“There’s the anticipation that OPEC+ is going to agree to extend their current levels for another two months, and at the same time, the market anticipates that the reopening of economies around the world will increase demand and will get us in a position such that, by August, the oil market will be in balance,” said Andy Lipow, president of consultants Lipow Oil Associates.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
The gradual reopening of businesses in a growing number of U.S. states and countries around the world after shelter-in-place mandates caused by the coronavirus pandemic also boosted oil prices.
Steadily increasing U.S. gasoline demand and falling crude inventories at the nation’s oil storage hub in Cushing, Oklahoma, have also supported prices, said Bob Yawger, director of energy futures at Mizuho in New York.
Industry group American Petroleum Institute will release its weekly oil inventory report later in the day, with official data following on Wednesday.
Demand from independent refineries in China has started to wane on weak margins, higher differentials and the near evaporation of contango.
Around 15 cargoes of July loading Angolan were still available.
BP sold a cargo of Angolan Girassol previously offered at dated Brent plus $3.30 but further details did not immediately emerge.
India’s IOC has two buy tenders running for west African crude. One is for cargoes loading July 4-13 and the other for Aug. 1-10. Results for both are expected on Friday.
Prices are as follows:
(1)Dated Brent =$37.52 /bbl (2.06)
(2)Bonny Light =$37.865/bbl(2.115)
(3)QuaIboe =$37.865/bbl (2.115)
(4)Forcados =$38.115/bbl (2.115)