Picture: 123RF/EVGENII BASHTA
Picture: 123RF/EVGENII BASHTA

London — Oil prices fell on Wednesday on concerns about the market’s recovery after oil cartel Opec and its allies (Opec+) lowered their 2021 demand growth forecast, though strong Chinese factory activities lent some support.

Brent crude for May, which expires on Wednesday, fell 32c, or 0.5%, to $63.82 a barrel at 9.48am GMT. The more active Brent contract for June was down 30c, or 0.5%, at $63.87 a barrel.

US West Texas Intermediate (WTI) crude futures fell 28c, or 0.5%, to $60.27 a barrel.

Opec+ has lowered its oil demand growth forecast for 2021 by 300,000 barrels per day (bpd), a report from its experts panel meeting showed. Opec+ is set to meet on Thursday, to decide on output policy.

“Given this pessimistic outlook, it seems likely that the production quotas will be left in place for another month,” said Commerzbank analyst Eugen Weinberg.

Opec+ is currently curbing output by just more than 7-million bpd in a bid to support prices and reduce oversupply. Saudi Arabia has added to those cuts with an additional 1-million bpd.

“The oil market is still playing a guessing game today as to what supply policy Opec+ will set out at tomorrow’s meeting, but the $64 per barrel Brent price signals that traders expect a cautious approach from the alliance,” said Rystad Energy’s analyst Louise Dickson.

Kuwait’s oil minister Mohammad Abdulatif al-Fares expressed “cautious optimism” on Wednesday that the global oil demand will improve as Covid-19 vaccination programmes gather pace and industrial output recovers.

Oil prices found some support as China’s manufacturing activity expanded at the quickest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays. 

Reuters

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