Oil prices dip ahead of OPEC+ meeting

Oil prices dipped on Thursday ahead of talks between OPEC and its allies on whether to ease production cuts and after a record jump in U.S. crude oil stocks following Texan refinery outages.

Brent crude futures fell 23 cents, or 0.3%, to $63.84 a barrel by 0927 GMT. U.S. West Texas Intermediate (WTI) crude futures dropped 31 cents, or 0.5% to $60.97.

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are considering rolling over production cuts into April instead of raising output, three OPEC+ sources told Reuters, citing the fragile nature of oil demand recovery as the coronavirus crisis continues.

The market had expected OPEC+ to ease production cuts by about 500,000 barrels per day (bpd) from April and for Saudi Arabia, OPEC’s de facto leader, to end its voluntary production cut of an additional 1 million bpd. Saudi intentions, however, remain unclear as yet.

“Prices retreated as two related questions have gone unanswered,” PVM analysts said, pointing to whether Saudi Arabia would end its voluntary reduction after March and what a potential rollover of OPEC+ cuts would mean for the rest of the quarter.

“It is still very much feasible to see an average increase of around 500,000 bpd over Q2 with an unchanged output level next month,” the analysts wrote.

Citi analysts said they expect the group to find a compromise for a nominal production increase of 500,000 bpd and for Saudi Arabia to keep its production quota at 8.256 million bpd.

In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.

Giving a floor to prices, Yemen’s Houthi forces said on Thursday that they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Red Sea city of Jeddah. There was no immediate confirmation from Saudi authorities.