Oil prices edged up on Thursday after a drop in U.S. oil product stocks, paving the way for further rises ahead of a meeting between the Organisation of the Petroleum Exporting Countries (OPEC) producers and their allies to discuss their future output strategy.
Brent crude futures gained 37 cents or 0.91% to trade at $41.08 a barrel at 10:48 West Africa Time while its U.S. counterpart benchmark, West Texas Intermediate (WTI) crude futures advanced by 24 cents or 0.63% to $38.20 per barrel.
Both benchmarks had fallen by nearly 2% earlier in the session.
Bonny Light, Nigeria’s premium oil grade, was up by 38 cents or 0.97% at $39.67 per barrel at the last session just as Qua Iboe, another key national grade, strengthened further by 75 cents or 1.88% to $40.57.
Read also: Oil prices fall as U.S. crude stocks build, Bonny Light up by $1.11
Anxieties about fuel demand intensified following a surge in coronavirus infections impelled China to cancel flights and close schools and many U.S. states including California, Florida and Texas recorded dramatic increases in new cases.
A build in U.S. crude stocks to a historic high for a second consecutive week weakened sentiment but U.S. government data demonstrated lower stockpiles of gasoline and distillates, which comprises diesel and heating oil, signalling higher demand.
“Gasoline and distillates both fell unexpectedly… Add to that that oil producers are still feeling the impact of the rout from March and April as (U.S.) crude oil output is now down at 10.5 (million barrels per day) and you might conclude that bulls have a case in point,” PVM oil analysts said in a note seen by Reuters.
OPEC and its Russia-led allies, a group known as OPEC+, are expected to hold a virtual conference on Thursday to discuss the future of a record 9.7 million barrels per day (bpd) production cut.
OPEC+ compliance with crude output cut commitments in May stood at 87%, two OPEC+ sources confirmed on Wednesday.
Iraq and Kazakhstan are hoped to put forward their proposal for output cuts and compensation for overproduction to a meeting of the OPEC+ ministerial committee, known as the JMMC, on Thursday, an OPEC+ source said.
OPEC warned in a monthly report that the market would remain in surplus in the second half of 2020 despite improvement in demand as it now expect supply from outside the group to be about 300,000 bpd higher than earlier projection.
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