Picture: REUTERS
Picture: REUTERS

London — Oil prices rose on Thursday on optimism over a US government spending plan and hopes that Opec and its allies will keep production curbs in place when they meet on Thursday.

Brent crude was up by 91c, or 1.5%, at $63.65 a barrel by 8.49am GMT. US oil was up 99c, or 1.7%, at $60.15 a barrel.

Ministers from Opec and allies including Russia, a group called Opec+, meet on Thursday to reassess output policy.

Opec+ will debate options from May and beyond, including a rollover of existing cuts and a gradual increase of production, three Opec+ sources said.

Opec+ is currently curbing output by just over seven-million barrels per day (bpd) to support prices and reduce oversupply. Saudi Arabia has added to those cuts with a further one-million bpd.

“Given the recent wobble in prices, along with demand concerns re-emerging once again, there is a growing consensus that the OPEC+ will likely roll over current cuts for an additional month,” ING analyst Warren Patterson said.

Opec+ has trimmed its oil demand growth forecast for 2021 by 300,000 bpd over renewed lockdowns, making it more likely the group will agree to sustain its curbs.

France entered its third national lockdown and schools closed for three weeks to push back a third wave of Covid-19 infections that threatens to overwhelm hospitals. Several other European countries have also increased restrictions.

Oil also found some support in US economic strength after President Joe Biden outlined a $2.3-trillion spending plan to invest in traditional projects such as roads and bridges alongside tackling climate change.

US crude stocks also fell unexpectedly last week, helping to support oil prices, Energy Information Administration data showed.

“The inventory data ... showed that the situation is continuing to normalise on the US oil market,” Commerzbank analyst Eugen Weinberg said.

Other factors, including the rise of gasoline demand in the US, also supported prices, Weinberg said.

Reuters

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