Oil prices have edged up on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies that include Russia may deepen cuts at its meeting to be held on this week - Photo: Privacy

JAKARTA (TheInsiderStories)Oil prices have edged up on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies that include Russia may deepen cuts at its meeting to be held on this week. Ahead of the meeting industry data showing that United States (US) crude stockpiles fell more than expected helped to lift prices.

On Wednesday (12/04), Brent crude futures were up 35 cents, or 0.6 percent, at US$61.17 a barrel by 0246 GMT. While US West Texas Intermediate (WTI) crude futures were up by 31 cents, or 0.6 percent, at $56.41, Reuters reported.

The group is known as OPEC+ will consider deepening existing oil production cuts by about 400,000 barrels per day to 1.6 million barrels per day, Thamer Ghadhban, Iraq’s oil minister, told reporters on Tuesday in Vienna. The current OPEC+ agreement calls for an output cut of 1.2 million barrels a day from late 2018 levels through March 2020.

Members of OPEC have scheduled a meeting for Thursday and will hold a separate gathering with allied non-OPEC members on Friday in Vienna.

There is still some skepticism in the market over whether OPEC will cut output further, however, with many analysts expecting only an extension of existing cuts.

“We think OPEC could announce an extension to supply cuts to cover the whole of 2020 rather than the three to six months the market is currently factoring in,” BNP Paribas Markets said in a note.

An extension “with an option to review the policy at the next meeting, would send a strong message of commitment by signatories of the Declaration of Cooperation,” the BNP Paribas analysts said.

OPEC+ has been curbing supply since 2017 and is expected to keep the cuts in place to balance out record production in the US.

Crude oil inventories in the US fell by more than expected last week, according to the industry group American Petroleum Institute (API). Stockpiles of crude oil fell by 3.7 million barrels, more than double expectations of a decline of 1.7 million barrels.

Gasoline and distillate stocks increased, however, and the market will be looking for confirmation of the crude draw when official figures come out from the US Department of Energy’s Energy Information Administration later on Wednesday.

Keeping a lid on prices is the dwindling prospects of a trade deal between the US and China. The trade dispute between the world’s two biggest economies has weakened the global economy and held back oil demand growth. President Donald Trump said on Tuesday an agreement to end the trade dispute may have to be delayed until after the American presidential election in November 2020.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com