Oil prices jump five per cent as Opec mulls supply cuts
The price of Brent crude increased by $2.91 today, up 4.5 per cent and West Texas Intermediate (WTI) crude rose $2.75 to around $64 a barrel, up 4.49 per cent.
The price rises came as ministers from the Organisation of the Petroleum Exporting Countries and its allies convened a meeting to discuss a potential oil output cut.
Saudi Arabia is reportedly considering extending its voluntary oil cuts of one million barrels per day until April.
Analysts and traders say that oil’s four-month price rally is out of step with demand as physical sales aren’t expected to fully recover until 2021. However, with oil prices above $60 a barrel, some analysts predict that Opec+ producers will increase output by around half a million barrels per day.
Ole Hansen, head of commodity strategy at Saxo Bank said: “If that’s the outcome, then it’s a far cry from what the market was potentially looking for in a 1.5m-barrel increase just a couple of days ago, so it’s a change that at least in the short term will reflect in a price bounce.”
Despite a record surge of more than 21m barrels in crude oil stockpiles last week, gasoline stocks fell by the largest amount in 30 years as refining dropped to a record low as a result of the Texas freeze.