Oil rises as traders await OPEC+ meeting on extending supply cuts

Oil prices rose on Friday after OPEC decided to move up discussions on whether to extend record production cuts to Saturday, indicating that some laggard countries may have agreed to align themselves with the deal.

Brent crude futures were up 95 cents, or 2.4%, at $40.94 a barrel as of 0920 GMT, after rising over $1 to $41.18.

U.S. West Texas Intermediate (WTI) crude futures rose 64 cents, or 1.7%, to $38.05 a barrel.

Brent has risen 16% since Friday to reach a three-month high, settling in a range more comfortable for producers like Russia. The contract has more than doubled since it crashed to as little as $15.98 a barrel on April 22.

WTI is up nearly 14% from Friday’s close, leaving benchmarks on track for the sixth week of gains, lifted by the output cuts and signs of improving fuel demand as countries ease lockdown measures imposed to prevent the spread of the new coronavirus.

Russia’s energy ministry said on Friday a video conference of a group of leading oil producers, known as OPEC+, would be held on Saturday.

OPEC and its allies had said they would bring forward the meeting, which had been scheduled for next week, should Iraq and others agree to boost their adherence to existing supply cuts.

“Prices are up with the meeting scheduled for tomorrow. There was lots of confusion… so it looks like they found a way forward,” Olivier Jakob at Petromatrix consultancy said.

Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend output cuts of 9.7 million barrels per day (BPD) into July.

If OPEC+ fails to agree to roll over the current output curbs, that would mean the cut could drop back to 7.7 million BPD from July through December as previously agreed.

“The growing fear is that not only will a deal to extend the deep cuts not be reached but (some) producers may even relax their current over-compliance. This would ultimately see output rise in the coming weeks,” ANZ Research said in a note.

Adding support was the first tropical storm of the season in the U.S. Gulf of Mexico. Storm Cristobal is expected to enter the central Gulf this week, an area rich with offshore platforms, and could see landfall along Louisiana’s refinery row on Sunday.

U.S. energy companies have already closed some production. “It’s not big, but there will be some shut-ins,” Jakob said.