MELBOURNE (Reuters) – U.S. crude futures rose as much as 6% in early trade on Thursday on expectations the world’s largest oil producers would agree to cut production at a meeting later in the day as global oil demand has collapsed amid the coronavirus pandemic.
U.S. West Texas Intermediate (WTI) crude CLc1 was trading up 4.9%, or $1.22, at $26.31 per barrel at 2229 GMT after touching a high of $26.61, adding to gains in the previous session.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – a group known as OPEC+ – are set to meet on a video conference on Thursday.
The meeting is expected to be more successful than their gathering in March, where they failed to agree to extend supply cuts and triggered a price war between Saudi Arabia and Russia.
Hopes for the meeting rose after media reports suggested Russia was ready to cut its output by 1.6 million barrels per day and Algeria’s energy minister said he expected a “fruitful” meeting.
However with oil prices having lost half their value since the start of the year and oil demand forecast to slide as much as 30%, analysts are sceptical about how effective an OPEC+ cut would be in shoring up prices.
“For what it’s worth, we suspect that a large and unconditional output cut is unlikely,” analysts at Capital Economics said in a note.
“Even if we are wrong, we think a sizeable output cut would merely put a floor under prices given the moribund state of demand,” they said.
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