Oil prices surge on OPEC hopes and Russia meets on production cuts By Reuters

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© Reuters. FILE PHOTO: A maze of crude oil pipes and valves at the Strategic Petroleum Reserve in Freeport, Texas

By Jane Chung

SEOUL (Reuters) – Oil rebounded on Wednesday as US crude oil jumped more than $ 1, raised by hopes that a meeting between OPEC members and allied producers on Thursday will lead to production cuts to consolidate prices that collapsed amid the coronavirus pandemic.

Brent crude () rose 75 cents, or 2.4%, to $ 32.62 per barrel at 0246 GMT after falling 3.6% on Tuesday. Crude oil in West Texas Intermediate (WTI) () rose $ 1.30, or 5.5%, to $ 24.93 per barrel after falling 9.4% in the previous session.

Thursday’s videoconference meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, is expected to be more successful than their meeting in early March. This resulted in a failure to extend the cuts and a price war between Saudi Arabia and Russia amid declining demand.

But doubts remain as to the role of the United States in any drop in production.

“The question of whether the United States will join the production cuts is closely watched as the market remains focused on the OPEC meeting,” said Kim Kwang-rae, raw materials analyst at Samsung (KS ? Futures à Séoul. “Oil prices have been volatile because the market is on hold.”

Saudi Arabia, OPEC member countries and Russia are likely to agree to cut production, but the deal may depend on whether or not the United States accepts cuts. The US Department of Energy said on Tuesday that US production was already declining without government intervention.

“Saudi Arabia and Russia continue to reach an agreement … What is clear is that the United States must be involved,” ANZ Research said in a note.

US crude oil production is forecast to drop 470,000 bpd and demand is expected to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) announced on Tuesday.

US crude stocks jumped from 11.9 million barrels to 473.8 million barrels in the week of April 3, according to data from the American Petroleum Institute (API) released on Tuesday.

With declining fuel demand in the midst of the virus epidemic, gasoline inventories also rose 9.4 million barrels, marking the largest week-long increase in API figures since January 2017.

Official EIA data is expected at 10:30 a.m. EDT (2:30 p.m. GMT) Wednesday.

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