Oil prices rise on hope that OPEC+ will extend output cuts

1 April 2021 (Last Updated April 1st, 2021 10:12)

Crude oil prices have witnessed a surge in hope that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in the upcoming meeting would extend output constraint amid a resurgence in Covid-19 infections globally.

Oil prices rise on hope that OPEC+ will extend output cuts
OPEC+ is anticipated to continue production cuts. Credit: Leo Dalitte / Unsplash.

Crude oil prices have witnessed a surge in hope that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in the upcoming meeting would extend output constraint amid a resurgence in Covid-19 infections globally.

Brent crude for June delivery rose by $0.31, or 0.5%, to reach $63.05 a barrel while the US oil increased by $0.38, or 0.6%, to settle at $59.54 a barrel, reported Reuters.

Ministers from OPEC+ are scheduled to meet on 1 April to discuss on oil output policy with options, including a gradual increase of output and output roll-over.

Eurasia Group was cited by the news agency as saying in a report on the gathering: “The most likely outcome of the … meeting is no significant changes in production.

“The caution on display in the OPEC+ discussions signals that any decisions on tapering will likely be delayed to the May meeting.”

The reduced demand forecast for OPEC+ oil by 300,000 barrels per day this year supported prices.

Considering this, the OPEC+ is anticipated to continue production restraints in the upcoming meeting.

However, no formal recommendation has been made by the Joint Technical Committee, which advises the group of oil-producing nations that includes Saudi Arabia and Russia, according to three OPEC+ sources.

In order to reduce oversupply and support prices, OPEC+ is currently curbing production by more than seven million barrels a day while Saudi Arabia made an additional cut by one million barrels a day.

On 31 March, France President Emmanuel Macron announced a third lockdown to contain the third wave of Covid-19 infections.