Traders aren’t sure if OPEC+ will leave output cuts steady in April, or lower them slightly. Prices could firm if the cuts stay at current levels.
Oil prices jumped on Wednesday as market participants focused on talk that the OPEC+ global alliance of producers might withhold an output hike for April, overshadowing a U.S. government report showing a humongous build in crude stocks for last week. Expectations have been rife over the past week that OPEC+, a 23-member coalition which bands the original 13 members of the Saudi-led Organization of the Petroleum Exporting Countries with 10 non-members steered by Russia, will raise output by 500,000 barrels per day at least from next month. Reuters, however, reported on Wednesday, quoting three OPEC+ sources, as saying the alliance was considering rolling over existing production cuts in April, instead of raising output, as oil demand recovery remained fragile due to the Covid-19.
Prices are higher than they were when the pandemic started in March 2020 but demand hasn’t reached its pre-pandemic levels.