Opec+ output cuts push oil prices up

Oil prices rose on Wednesday, boosted by expectations of US crude inventory declines as well as the latest output cut targets set by the Opec+ producer cartel.

Brent crude futures gained 45c, or 0.5%, to $85.39 a barrel by 3.52am GMT. West Texas Intermediate US crude was up 40c, or 0.5%, to $81.11 a barrel.

The rises came as an industry report showed US crude stocks fell by about 4.3-million barrels in the week ended March 31. The official inventory report by the US Energy Information Administration is due at 2.30pm GMT on Wednesday.

Continuing to add support were the latest targets to reduce supplies set by Opec+.

“Energy traders are still digesting the Opec+ surprise production cut and any news that suggests the oil market will remain even tighter is going to send prices even higher,” said Edward Moya, an analyst at Oanda.

The Opec+ plan would bring the total volume of cuts by the group to 3.66 million barrels per day (bpd), including a 2 million bpd cut last October, equal to about 3.7% of global demand.

In Asia, data showed Japan's service sector grew in March at the fastest rate in more than nine years.

However, weak manufacturing activity in the US and China — the two biggest oil consumers — have kept oil prices from moving up further, despite the prospect of tighter supply following the Opec+ cuts.

Traders will be looking for cues on broader economic trends from the US non-farm payrolls data due later this week, analysts say.

“The US non-farm payroll will probably be the most influential economic data that drives the broad market’s movements,” said Tina Teng, an analyst at CMC Markets.

Reuters