Oil advances after Opec+ affirms production cuts

NEW YORK: Oil rose toward a five-month high after the Organisation of the Petroleum Exporting Countries and its allies (Opec+) confirmed it would maintain its existing supply cuts through the end of June.

Brent crude edged closer toward US$90 a barrel after climbing more than 2% over the previous two sessions, while West Texas Intermediate was near US$86.

Opec+ recommended no policy changes at a meeting on Wednesday, which will help keep global markets tight over the next few months.

Compliance with Opec+ quota levels is still an issue, however. Iraq pumped more oil than its agreed-upon target in March, although it has pledged to rein in flows to compensate. Russian crude exports have also risen recently.

“For the next two or three months, I expect to see Opec production fall even further,” Daniel Hynes, senior commodity strategist for ANZ Banking Group Ltd, said on Bloomberg Television.

Members came out of the Opec+ meeting “talking about adhering to those quotas a lot closer,” referring to the group’s previously agreed-upon cuts.

The global crude benchmark is up by around 16% this year on tighter supply, disruptions to shipping and Ukrainian attacks on Russian refineries.

There are signs of a demand revival in Asia, while Federal Reserve chair Jerome Powell said Wednesday that a US rate cut is still likely this year, although the central bank is waiting for clearer signs of lower inflation.

US nationwide crude stockpiles rose by 3.21 million barrels last week. That contrasted with an industry group’s forecast for a drop in inventories.