Oil rose before a crucial OPEC + meeting, as the alliance was expected to agree on a coordinated increase in production as the impact of the pandemic on the market diminished.
In the long run, Brent rose 1.5% after three consecutive days of losses, for the first time since December. The widespread view among the Organization of the Petroleum Exporting Countries and its allies is that the oil market can absorb additional barrels, according to people familiar with the matter.
Oil has staged a strong rally this year, led by significant OPEC + borders – including unilateral cuts by Saudi Arabia – and a return to vaccine demand. The force has paved the way for the alliance to unleash barrels, OPEC Secretary-General Mohammad Barkindo said on Tuesday that both the broader economic outlook and the fundamentals of the oil market continue to improve. The group could return most of the 1.5 million barrels a day that is under debate.
“The question is not ‘whether’, but rather ‘to what extent’ the oil nations will ease supply margins,” said Norbert Ruecker, an analyst at Julius Baer Group Ltd. an overload ”.
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There are two parts of production growth that OPEC + will discuss. The first is whether the cartel will continue a collective increase of 500,000 barrels per day in April. The second is the question of how Saudi Arabia could phase out the additional 1 million barrels a day reduction.
The aggregate pace of recovery shows “ perfect opportunity for OPEC + to increase production, ”Australia & New Zealand Banking Group Ltd. said in a statement, predicting that the group would agree to add 750,000 barrels a day.
See also: Big Oil does not bet on the future of the crude: David Fickling
Bulls can attract comfort from other signs of declining stocks in Europe. Gross inventories at the ARA Key Center fell to their lowest level in May, according to Genscape.
However, US crude oil stocks rose by more than 7 million barrels last week, The American Petroleum Institute reported, according to family members. If confirmed by the official number, this would be the largest weekly version in December. API figures also showed declines in gasoline and distillates.
The market structure has also faltered in recent days, indicating that extreme market tension may be easing. Brent’s prompt time traded up to 45 cents on Monday, down from 73 cents earlier in the week.
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