Prior to an OPEC+ meeting on Sunday, oil prices increased by more than $2 per barrel on Thursday. The passage of legislation to suspend the U.S. debt ceiling also helped to mitigate the effects of the nation's swelling inventories.
By 2:01 p.m., U.S. West Texas Intermediate crude (WTI) had increased $2.4, or 3.5%, to $70.49 per barrel. Brent crude futures increased $2.05, or 2.8%, to $74.65 a barrel as of EDT (18:01 GMT).
After two straight sessions of losses, both benchmarks are poised for their largest daily gains in almost a month after the House of Representatives passed a measure on Wednesday to postpone the government's debt ceiling and increase the likelihood of avoiding a default.
“The successful debt ceiling negotiations clear that minefield, but the overall demand outlook is still murky – the trucking space is doing poorly, for example,” CFRA Research analyst Stewart Glickman said.
The Organization of the Petroleum Exporting Countries and its allies, which includes Russia, will convene on June 4 in order to discuss global energy policy.
“The OPEC+ meeting this weekend may be leading to a little caution around those (low price) levels, particularly in light of the ‘watch out’ warning from the Saudi energy minister,” he added.
Four OPEC+ sources told Reuters that the alliance is unlikely to increase production cuts at the Sunday meeting, but other experts argue that it is still a possibility given the recent disappointment of demand indications from China and the U.S.
According to data from the Energy Information Administration, U.S. crude oil stockpiles unexpectedly increased last week as imports increased and strategic reserves decreased to their lowest level since September 1983.
“Third Bridge experts would not rule out more aggressive actions from OPEC+, but the tug-of-war right now in the market is the seasonal versus the cyclical,” said Third Bridge analyst Peter McNally.
“We are watching to see how strong the developed world's summer demand uptick will be relative to the struggles of China's cyclical recovery. This will determine how effective OPEC+ will be,” he said.