Oil futures drifted higher Tuesday, as traders await a meeting later this week of the Organization of the Petroleum Exporting Countries and its allies that will decide how much production to restore beginning next month.
West Texas Intermediate crude for April delivery CL.1, +0.49% CLJ21, +0.49% rose 28 cents, or 0.5%, to $ 60.92 a barrel on the New York Mercantile Exchange. May Brent crude BRN00, +0.28% BRNK21, +0.28%, the global benchmark, was up 23 cents, or 0.4%, at $ 63.92 a barrel on ICE Futures Europe. Both grades fell Monday.
Recent price action suggests “much of the positive news had already been priced in,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
A Reuters survey estimated that OPEC produced 24.89 million barrels a day in February, a drop of 870,000 barrels a day from January for the first monthly decline since June. OPEC+ had decided to keep output steady in February, while Saudi Arabia said it would unilaterally reduce production by 1 million barrels a day in February and March. The survey found Saudi Arabia cut output by 850,000 barrels a day in February.
If other OPEC+ countries moved to step up supply by 500,000 barrels a day, Saudi Arabia would likely withdraw its voluntary cut, Weinberg said, which would boost April production alone by more than 1.3 million barrels a day compared with the Reuters survey for February.
“Added to this would presumably also be higher production from Russia and other non-OPEC countries. Since demand in the West remains fairly fragile, we expect prices to fall in the short term,” Weinberg said.