Oil. Picture: REUTERS
Oil. Picture: REUTERS

London — Oil gained on Wednesday ahead of meetings this week where Opec and its allies are expected to extend production curbs to support the market, while industry data showing that US crude stockpiles fell more than expected helped to lift prices.

Brent crude futures were up 75 US cents, or 1.23%, at $61.57 a barrel by 9.40am GMT.

US West Texas Intermediate (WTI) crude futures were up 65c, or 1.16%, at $56.75.

Opec and allies that include Russia may be preparing to approve deeper crude output cuts this week, when they meet in Vienna, according to Iraq, the group's second-biggest producer.

Thamer Ghadhban, the oil minister of Iraq, told reporters on Tuesday in Vienna that “a deeper cut is being preferred by a number of key members”.

There is still some scepticism in the market over whether Opec will cut output further, although it is accepted that the group is keen to support prices, with many analysts expecting an extension of existing cuts.

“Amid the trade war uncertainty, Opec will be even more determined to maintain a floor on oil prices and will work to deliver precisely that outcome,” said Stephen Innes, chief Asia market strategist at AxiTrader.

Opec members meet on Thursday and on Friday the Opec+ group meets. Opec+ has been curbing supply since 2017 and is expected to keep the cuts in place to balance out record production in the US.

Crude oil inventories in the US fell more than expected last week, according to industry group the American Petroleum Institute (API). Stockpiles of crude oil fell 3.7-million barrels, more than double the expectation of a decline of 1.7-million barrels.

Oil prices are being held back by the uncertainty over prospects for a trade deal between the US and China. The trade dispute between the world's two biggest economies has weakened the global economy and limited oil demand growth.

US President Donald Trump said on Tuesday that an agreement to end the trade dispute may have to be delayed until after the US presidential election in November 2020.

Prices are likely to fall in 2020 as oil supplies keep rising, outweighing any pick-up in growth, Fitch Solutions said. It predicted Brent crude would drop to an average of $62 a barrel in 2020 and $58 in 2021, from a $64 average in 2019.

Reuters