Both Brent and WTI prices are still down by 40% for the year, according to Reuters. Credit: Steve Jurvetson.

Oil prices have increased ahead of a virtual meet later this week of OPEC producers to discuss an extension of production cuts beyond this month.

Brent crude LCOc1 futures increased by 0.91% to $38.67 a barrel, while US West Texas Intermediate (WTI) crude CLc1 futures rose by 0.56% to $35.64 per barrel, Reuters reported.

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Brent contracts have seen gains for the past six weeks, supported by record production cuts from the OPEC+ Group.

However, both Brent and WTI prices are still down by 40% for the year.

Commonwealth Bank commodities analyst Vivek Dhar was quoted by the news agency as saying: “The whole story is very much based around the supply cuts and the demand recovery.”

He added that the extension of output cuts could push oil prices to $40 per barrel.

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In April, OPEC+ Group agreed for a record output cuts of nearly ten million bpd, starting from 1 May until the end of June this year.

The group is now considering extending these output cuts into July or August, at an online meeting proposed to be held on 4 June.

Dutch bank ING analysts said: “Russia will be the key obstacle in any extension, and they are unlikely to agree on any extension which goes beyond a couple of months.”

Citing real-time data provider Genscape data, traders said that the US crude inventories at the Cushing storage hub in Oklahoma fell by about 54.3 million barrels in the week until 29 May.

A preliminary Reuters poll showed that the overall US crude inventories are likely to have increased in the week that ended on 29 May.

However, trade tension between China and the US over Beijing’s security clampdown in Hong Kong capped gains.