Crude oil futures surged at the end of the Wednesday trading session as traders are betting that oil-producing nations will slash output until June. Oil prices were already rallying on data that showed US production is continuing to decline, a trend lift crude even higher in the near-term.
May West Texas Intermediate (WTI) crude futures soared $2.13, or 9.01%, to $25.76 per barrel at 19:17 GMT on Wednesday on the New York Mercantile Exchange. Crude has soared more than 21% in recent sessions, paring its year-to-date loss to 58%.
Brent, the international benchmark for oil prices, also jumped midweek. June Brent crude futures added $0.40, or 1.22%, to $33.24 a barrel on London’s ICE Futures exchange. Brent has climbed nearly 30% over the last week, trimming its YTD drop to 49%.
According to the US Energy Information Administration (EIA), domestic crude inventories advanced 15.2 million barrels in the week ending April 3. The market had forecast a rise of 8.4 million barrels. Gasoline stockpiles increased 10.5 million barrels, while distillate supplies edged up 476,000 barrels.
US crude output decreased by 600,000 barrels per day (bpd) to 12.4 million bpd.
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers (OPEC+) will participate in a virtual meeting to decide on global crude production. Traders are heavily invested in the meeting, as it could either crash the oil market or lift prices above $30. The belief is that OPEC already has a baseline cut of between eight million and 10 million bpd until June, but the cartel could fine-tune the amount and potentially go higher. Some experts say there is a chance that OPEC+ reductions could reach as much as 15 million bpd.
What could persuade the group to go as high as 15 million bpd? The United States. Because the US has become an energy juggernaut in recent years, there are calls for America to impose industry-wide cuts, too. But President Donald Trump noted that the sector is already voluntarily doing so, plus he intends to move forward with tariffs if OPEC decides to avoid an agreement on a sizeable production cut.
Should talks fall through, there could be another blood bath in oil prices.
In the end, whatever oil-rich nations do will unlikely be enough since demand is still projected to plummet by between 16 and 20 million bpd.
In other energy commodities, May natural gas futures tumbled $0.07, or 3.83%, to $1.78 per million British thermal units (btu). May gasoline futures rose $0.0478, or 7.37%, to $0.696 per gallon. May heating oil futures dipped $0.0032, or 0.31%, to $1.024 a gallon.