WTI crude is higher by more than $1 after a Reuters report said OPEC+ will consider extending voluntary oil output cuts into Q2. More importantly, the report said the cuts could be kept in place until year end.
The report cites three unnamed sources.
Current cuts total 2.2 million barrels per day and Saudi Arabia has layered its own cuts on top of that. However the Saudis could gradually begin bringing back supply in April and that could be more of an X-factor for oil in the week ahead, when the decision is expected to be made.
One source in the report said that extending the cuts into Q2 was 'likely' while two said a longer extension until year end was possible.
For what it's worth, most already assumed an extension until the summer. Jan-March is the weakest time of year for oil demand so inventories generally build. It's not until spring/summer when you can fully evaluate demand.
However there are some good signs. Strong Chinese travel during the lunar new year has led to strong buying from China.
“Some refineries may be raising run rates or postponing maintenance plans because of strong demand momentum following higher-than-expected Lunar New Year travel,” analysts at Energy Aspects Ltd. including Jianan Sun wrote in note last week. “Chinese spot crude buying has been slightly stronger than our expectations.”
WTI crude was last up $1.15 to $78.75. It will need to break $80 to get some real momentum.
