Oil was higher Wednesday morning in Asia after the Organization of the Petroleum Exporting Countries and partners (OPEC+) paused talks ahead of its ministerial meeting to review production policy, taking place on Thursday.
Brent oil futures increased 0.61% to $74.73 by 10:39 PM ET (2:39 AM GMT) and WTI futures surged 0.69% to $73.48.
Some OPEC+ members, together with Russia, proposed increasing the oil supply while Saudi Arabia was worried about the global spread of the coronavirus delta variant, notwithstanding the increasing demand. Consequently, the cartel suspended its preliminary talks to Friday to provide for more time to resolve differences.
OPEC Secretary-General Mohammad Barkindo was confident about the market at the OPEC+ Joint Technical Committee meeting on Tuesday but warned that it not entirely out of the woods yet.
The group is supposed to relieve some of the supplies it halted when demand reduced thanks to the spread of coronavirus in 2020. Investors anticipate an extension of 550,000 barrels a day.
Even if OPEC+ increases supply by more than anticipated, it will not reach inventories in time to ease the tight market. Goldman Sachs Group Inc (NYSE: GS) analysts, including Damien Courvalin and Jeff Currie, stated in a report.
Eventually, much more OPEC+ supply will be required to balance the oil market by 2022, they continued.
Other investors now anticipate the outcome of the OPEC+ ministerial meeting.
They’ll see the trading resume to be choppy until Thursday, when the actual meeting is taken. Then, they get the official decision, Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, informed Bloomberg.
On the supply front, U.S. crude oil supply data from the American Petroleum Institute revealed a draw of 8.153 million for the week closing on Jun. 25. Forecasts made by Investing.com foretold a 4.460 million-barrel draw, while a 7.199 million-barrel draw was registered throughout the previous week.
Crude oil supply data from the U.S. Energy Information Administration is expected later in the day.
Oil prices have risen nearly 50% in 2021 as fuel demand bounced in important markets such as the U.S. and China, thanks to their continuing economic recovery from coronavirus. Nevertheless, the current spread of the coronavirus delta variant registered on the demand recovery.
The delta variant will proceed to be in the background and possibly keep the commodity from popping higher, stated Babin.