Oil rises on expectations OPEC+ will maintain supply discipline

By Sonali Paul
MELBOURNE, March 31 (Reuters) - Oil prices rose on
Wednesday, paring overnight losses a day ahead of a meeting of
OPEC and its allies, with investors betting the producers will
largely agree to extend their supply curbs into May.
Brent crude LCOc1 futures rose 15 cents, or 0.2%, to
$64.29 a barrel at 0202 GMT, after falling 1.3% on Tuesday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
jumped 15 cents, or 0.3%, to $60.70 a barrel, after falling 1.6%
in the previous session.
"The expectation is OPEC+ is going to show supply
discipline, so that's pivoting the market," said Commonwealth
Bank commodities analyst Vivek Dhar.
The Organization of the Petroleum Exporting Countries and
allies, together called OPEC+, are set to meet on Thursday,
following a month in which oil prices have whipsawed on concerns
about extended pandemic lockdowns in Europe, slow vaccine
rollouts and rising COVID-19 cases in India and Brazil, pitted
against growing optimism on growth in the United States.
OPEC+ last month surprised the market by agreeing to agreed
to extend supply curbs, with small exceptions for Russia and
Kazakhstan, at a time when fuel demand appeared to be
recovering.
"Given what's happened since then, the rationale is even
less so to add supply. So we think they'll maintain that
discipline in that meeting (on April 1)," Dhar said.
Under existing curbs, OPEC, led by Saudi Arabia, and
non-OPEC producers, led by Russia, have cut just over 7 million
barrels per day (bpd), while Saudi Arabia has made an additional
voluntary reduction of 1 million bpd.
Saudi Arabia is prepared to back an extension of the supply
cuts into June, including its own voluntary cut, to boost
prices, a source briefed on the matter told Reuters this week.
Adding to the view that they should hold back supply, data
from the American Petroleum Institute industry group on Tuesday
showed U.S. crude oil stocks rose by 3.9 million barrels in the
week to March 26, well above analysts' forecasts in a Reuters'
poll for a build of about 100,000 barrels. API/S
Data on U.S. inventories are due on Wednesday from the U.S.
Energy Information Administration.