Fear that Opec might not lift output pushes oil prices up

London — Oil prices rose on Wednesday, boosted by expectations that Opec+ producers might decide against increasing output when they meet this week, while signs of progress in the coronavirus vaccine rollout in the US gave further support.

Brent oil rose 80 US cents, or 1.3%, to $63.50 a barrel by 9.42am GMT. US West Texas Intermediate (WTI) crude rose 73c, or 1.2%, to $60.48 a barrel.

“The fundamentals of the oil market suggest further strength as oil demand grows with the recovery and leisure and travel activity is likely to bounce,” said Norbert Rücker, analyst at Swiss bank Julius Baer.

“We see oil prices pushing temporarily above $70 by midyear,” he added.

Oil cartel Opec, Russia and their allies, a group known as Opec+, are considering rolling over production cuts from March into April rather than raising output, three Opec+ sources told Reuters.

The group meets on Thursday.

Kuwaiti oil minister Mohammad al-Fares said the oil market was being supported by optimism about vaccinations.

US President Joe Biden said the US would have enough Covid-19 vaccines for every American adult by the end of May, after Merck  agreed to make rival Johnson & Johnson’s inoculation.

Biden said he hoped that the US would be “back to normal” by this time in 2022 and potentially sooner.

The American Petroleum Institute (API) industry group reported US crude stocks rose by 7.4-million barrels in the week to Feb. 26, in stark contrast to analysts’ estimates for a draw of 928,000 barrels.

However, that build occurred while US refining capacity was shut during the survey week because of cold weather in Texas. Refinery runs fell by 1.75-million bpd, API data showed.

Reuters