By Peter Nurse
Investing.com -- Crude oil prices pushed higher Thursday, amid growing optimism that top producers will react with caution as they discuss potentially raising output.
By 9:15 AM ET (1415 GMT), U.S. crude futures traded 1.8% higher at $62.38 a barrel, while the international benchmark Brent contract rose 1.8% to $65.25.
U.S. Gasoline RBOB Futures were up 0.8% at $1.9670 a gallon.
Members of the Organization of Petroleum Exporting Countries, Russia and other oil producers are meeting Thursday to decide whether to keep April output steady or increase it as they try to balance recent price gains against continued uncertainty about the economic recovery as the Covid-19 pandemic continues.
Prior to the meeting, the general expectation was that the four-month rally in the oil futures price from below $40 a barrel to currently above $60 would prompt these producers, a group known as OPEC+, desperate for additional revenue, to increase their agreed output, maybe by as much as 1.5 million barrels a day.
However, ahead of the start of the meeting, Saudi Arabia Energy Minister Prince Abdulaziz was quoted as saying that the oil market has "improved," but urged caution, saying the group “must keep some of its powder dry.”
Similarly, Russia's Deputy Prime Minister Alexander Novak said the oil market has not yet fully recovered even though we are “in much better shape,” with a lot of uncertainties remaining.
These relatively cautious statements have led traders to take a positive view Thursday on additional supply, with the producers adding less than the 1.5 million barrels a day originally envisioned.
“We believe that the market would be able to easily absorb this additional supply from April onwards,” said analysts at ING, in a research note. “In fact the market would likely be able to manage even further easing, but it probably wouldn’t be wise of OPEC+ to ease much more than the market is expecting, given the potential price impact of doing so.”
The focus on OPEC+ production has allowed market participants to look through Wednesday’s surge in U.S. crude stockpiles, jumping a record 21 million barrels last week, especially as this figure was influenced by the recent spell of wintry weather in the Southern (NYSE:SO) states.
“Offsetting this large build were significant draw downs in refined product stocks, with the effects of the freezing cold weather conditions that we saw across the US Gulf Coast in February still coming through in the data,” added ING.