Oil prices advanced further on Wednesday amidst optimism that the Organisation of the Petroleum Exporting Countries (OPEC) and allies will slow down a proposed hike in oil production dampened demand worries fuelled by an unforeseen surge in United States crude inventories and lower retail sales in the country.
Brent crude futures for January inched up by 22 cents, or 0.5%, to $43.97 a barrel by 08:33 West African Time, while U.S. West Texas Intermediate crude (WTI) for December was up by 6 cents, or 0.1%, at $41.49.
In the hope of confronting lower oil and gas demand, Saudi urged members of the OPEC+ cartel, made up of OPEC nations and allies led by Russia, to avoid rigidity in response to oil market needs as it made the case for stricter production measures in 2021.
Hiroyuki Kikukawa, general manager of research at Nissan Securities, said “hopes that OPEC+ will keep existing cuts further into 2021, or even increase the cuts, underpinned prices.”
He foresaw WTI would remain anywhere between $39 and $44 until a full meeting of OPEC later this month.
OPEC+ conducted a ministerial committee meeting on Tuesday but no formal recommendation came from it. A full ministerial conference aiming to discuss policy is timed be held on 30th November and 1st December.
The group is inclined to postpone an earlier agreed proposal to rev up supply come January by 2 million barrels per day (bpd) or 2% of the world demand, Reuters said, quoting sources.
Backing the push for a narrower supply policy in 2021, OPEC and its allies have tweaked oil need scenarios for next year with demand expected to be weaker than previous forecast.
Brent and crude declined in early trade after the American Petroleum Institute (API) said on Tuesday that U.S. crude stockpiles scaled up by 4.2 million barrels last week, topping analysts’ anticipation of a 1.7 million barrel increase in a Reuters poll.
Unimpressive U.S. retail sales worsened fears over lower consumption in the country, considering COVID-19’s new wave, said Jeffrey Halley, senior market analyst at OANDA.
U.S. retail sales grew below forecast last month, suppressed by escalating new coronavirus infections and depleting household income as millions of redundant Americans lose government’s financial aid.