Oil traded near $60 a barrel in New York ahead of an OPEC+ meeting this week, with the group expected to maintain its cautious stance on boosting output as near-term demand concerns persist.
West Texas Intermediate moved between small gains and losses, after dropping 1.6 per cent on Tuesday. In the run-up to Thursday’s closely watched ministerial talks, an OPEC+ panel down consumption estimates for the year. Still, the alliance also expects the surplus built up during the pandemic to be mostly gone within the next quarter.
Demand remains sluggish in many parts of the world as coronavirus lockdowns continue to restrict travel. Spanish refiner Repsol said it’s cutting processing at one of its plants due to weak fuel consumption. The global picture is far from uniform though, with China’s manufacturing figures beating estimates, pointing to higher-than-expected industrial activity there.
Oil has pulled back in recent weeks, paring a quarterly increase, as stricter lockdowns in parts of Europe curtail fuel use, while in the U.S., data from OPIS by IHS Markit show gasoline sales trailing pre-pandemic levels by 16 per cent. OPEC+ is expected to keep output stable when it meets this week, meaning millions of barrels a day of supply remain on the sidelines.
“The oil market is currently facing something of a paradox, with Brent prices above $60 a barrel, but at the same time the world having ample spare production capacity,” said Helge Andre Martinsen, senior oil analyst at DNB Bank ASA. “We expect OPEC+ to roll over production quotas from April to May.”
- WTI for May lost 0.5 per cent to $60.27 a barrel at 11:12 a.m. London time
- Brent for May also fell 0.5 per cent to trade at $63.83 ahead of the contract’s expiry later on Wednesday
- Brent for June was down 0.5 per cent at $63.84
The Organization of Petroleum Exporting Countries and its allies will debate whether to revive part of the 8 million barrels of daily output – about eight per cent of global supply – they’re withholding. After surprising traders at the last session by not easing curbs, the group is now expected to maintain that position.
At the same time, Saudi Aramco, the state-owned oil giant, is expected to raise its Arab Light official selling price for May supplies by 30 cents a barrel, according to the median estimate in a Bloomberg survey of refiners and traders. That’s despite continued flows of Iranian crude into China, and challenging conditions for many Asian refiners.
© 2021 Bloomberg L.P.