Oil bounced back Wednesday, with U.S. crude jumping more than $1 lifted by optimism that discussions between OPEC members and allied producers Thursday will set off production cuts to leap prices that have plunged amid the coronavirus pandemic.
Brent crude was up by 75 cents (2.4%) at $32.62 per barrel after dropping 3.6% Tuesday. U.S. West Texas Intermediate crude surged $1.30 (5.5%), to $24.93 a barrel after dropping 9.4% in the earlier session.
Thursday’s videoconference between members of the Organization of Petroleum Exporting Countries and its allies, including Russia (OPEC+), is broadly anticipated to be more beneficial than their meeting in early March. That ended in failure to extend cuts, and a price war between Saudi Arabia and Russia amid slumping demand.
Saudi Arabia, OPEC member countries, and Russia are likely to agree to cut production; however, that agreement could be dependent on whether the U.S. would go along with reductions. The U.S. Division of Energy stated Tuesday that U.S. production is already plunging without government action.
U.S. crude production, in the meantime, is expected to drop by 470,000 BPD and demand is set to settle by about 1.3 million BPD this year, the U.S. Energy Information Administration stated Tuesday.