NEW YORK (CBSNewYork) – After data showed U.S. crude stockpiles were shrinking and an OPEC report predicted an undersupplied market this year, oil prices jumped on Wednesday, heading for monthly and quarterly gains. By 11:22 a.m., the August Brent crude contract, which is set to expire on Wednesday, was up 28 cents, or 0.4 percent, to US$75.04 a barrel (1522 GMT.) At US$74.45 a barrel, the September contract was up 17 cents. WTI crude in the United States was up 23 cents, or 0.3 percent, to US$73.21 a barrel.
Both benchmarks are projected to achieve their seventh monthly gain in the last eight months, barely below highs last seen in 2018.
Brent is expected to average US$67.48 a barrel this year, while WTI is expected to average US$64.54, according to a Reuters poll.
According to the Energy Information Administration, oil stocks in the United States decreased for the sixth week in a row last week as refiners increased output in response to rising demand.
Cushing, Oklahoma, the delivery hub for WTI, saw inventories fall to their lowest level since March 2020.
“I expect crude oil prices to rise with sustained declines in Cushing crude oil stockpiles and an upcoming OPEC+ meeting tomorrow,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
On Thursday, the Organization of Petroleum Exporting Countries and its partners, known as OPEC+, will convene. From May to July, the group will restore 2.1 million barrels per day (bpd) to the market as part of a plan to progressively unravel last year’s record oil output restrictions. OPEC Secretary General Mohammad Barkindo boosted hopes for a wide rebound on Tuesday, saying that demand is likely to climb by 6 million bpd in 2021, with 5 million bpd coming in the second half of the year. According to Goldman Sachs, demand will increase by 2.2 million bpd by the end of 2021, leaving a 5 million bpd supply gap.
Nonetheless, according to an internal OPEC analysis obtained by Reuters, the oil market might return to a glut once the cartel is anticipated to unwind oil production cuts of less than 6 million barrels per day by April 2022.
When OPEC+ meets on Thursday, two sources told Reuters that the group will examine the possibility of extending its current oil production arrangement beyond April 2022.
(Shadia Nasralla and Aaron Sheldrick contributed additional reporting; Marguerita Choy and Elaine Hardcastle edited the piece.)/nRead More