By Elizabeth Low and Grant Smith
Refiners in China, Japan and South Korea snapped up cargoes from Russia, the Middle East and the U.S., leading to a gain in physical crude prices. Buying interest has been strong after some refiners got less oil than usual in term supply contracts from OPEC producers Saudi Arabia and Iraq.
Meanwhile, the Organization of Petroleum Exporting Countries and its allies gave reassurance at a committee meeting on Tuesday that they’re ready to act to keep markets stable later this month. The OPEC+ coalition is increasingly minded to delay plans to restore more of the output they’ve halted this year to stave off a glut.
“Risk assets and oil will reset higher, not because current and short-term conditions will change, but because the expectations around the path to economic and oil demand recovery will change,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA.
Brent has wobbled since topping $45 a barrel last week as the market grapples with an uneven demand recovery. While China’s rebound is accelerating and Asian refiners are buying more crude, a resurgent virus in Europe and the U.S. is sapping fuel consumption there.
OPEC+ is scheduled to gather at the end of the month for a ministerial meeting that will set its production policy. A technical panel on Monday suggested the group consider holding off on output increases by three to six months, but Saudi Energy Minister Prince Abdulaziz bin Salman said the jury is out on a possible extension beyond January.
Prices shrugged off a surprise jump in U.S. supplies. The American Petroleum Institute reported on Tuesday that crude inventories swelled by 4.17 million barrels last week, according to people familiar with the matter. That’s more than double the increase expected from government data due later Wednesday.