Oil prices dip ahead of Opec+ talks and jump in US crude stocks

London — Oil prices dipped on Thursday ahead of talks between oil cartel Opec and its allied producers (Opec+) on whether to ease production cuts and after a record jump in US crude oil stocks after Texan refinery outages.

Brent crude futures fell 23c, or 0.3%, to $63.84 a barrel by 9.27am GMT. US West Texas Intermediate (WTI) crude futures dropped 31c, or 0.5% to $60.97.

Opec+ is considering rolling over production cuts into April instead of raising output, three Opec+ sources said, citing the fragile nature of oil-demand recovery as the coronavirus crisis continues.

The market had expected Opec+ to ease production cuts by about 500,000 barrels per day (bpd) from April and for Saudi Arabia, Opec’s de facto leader, to end its voluntary production cut of an additional 1-million bpd. Saudi intentions, however, remain unclear as yet.

“Prices retreated as two related questions have gone unanswered,” PVM analysts said, pointing to whether Saudi Arabia would end its voluntary reduction after March and what a potential rollover of Opec+ cuts would mean for the rest of the quarter.

“It is still feasible to see an average increase of about 500,000 bpd over the second quarter with an unchanged output level in April,” the analysts wrote.

Citi analysts said they expect the group to find a compromise for a nominal production increase of 500,000 bpd and for Saudi Arabia to keep its production quota at 8.256-million bpd.

In the US, despite a record surge of more than 21-million barrels in crude oil stockpiles last week, petrol stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.

Giving a floor to prices, Yemen’s Houthi forces said on Thursday that they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Red Sea city of Jeddah. There was no immediate confirmation from Saudi authorities. 

Reuters