Oil gains after big US cut eyes on OPEC committee meeting By Reuters

By Jane Chung

SEOUL (Reuters) – Oil prices rose on Wednesday after a sharp drop in US crude inventories, with the market waiting for the next steps of a meeting later in the day on the future level of cuts. of production of OPEC and its allies.

Brent crude oil futures () rose 22 cents, or 0.5%, to $ 43.12 a barrel at 0640 GMT, and crude futures () West Texas Intermediate (WTI) rose 23 cents, or 0.6%, to $ 40.52 on barrel.

Reflecting a recovery in fuel demand despite the coronavirus pandemic, US crude inventories fell by 8.3 million barrels in the week to July 10, exceeding analyst expectations for a decrease of 2.1 million barrels, according to data from the American Petroleum Institute industrial group. [API/S]

Official numbers from the US Department of Energy’s Energy Information Administration (EIA) are due on Wednesday.

“The API numbers released overnight have provided some support to the market in today’s morning operations,” ING Economics said in a note.

On the supply side, the market will watch for news of a meeting of the Joint Ministerial Monitoring Committee (JMMC) of the Organization of Petroleum Exporting Countries (OPEC) later on Wednesday.

“The market will be eager to see if deeper cuts will be made for an additional month, or if the group will stick to the original plan and start cutting cuts,” according to ING Economics.

“Most of the indications suggest it will be the last, with a greater focus on compliance and compensatory cuts.”

Key members of OPEC and its allies, including Russia, collectively known as OPEC +, are determined to decide whether to extend the production cuts of 9.7 million barrels per day (bpd) ending in July or reduce them to 7.7 million bpd.

“Oil prices are likely to trade in the $ 40 range, with the market paying close attention to today’s JMMC results,” said Kim Kwang-rae, commodities analyst at Samsung (KS 🙂 Securities at Seoul.

In June, OPEC and its allies achieved 107% compliance with their agreed cuts in oil production, an OPEC + source said Tuesday.

Meanwhile, OPEC said in its monthly report that global oil demand would increase by a record 7 million bpd in 2021 as the world economy recovers from the coronavirus pandemic, although it will remain below the levels of 2019.