Brent above $40/bbl as output cut extension expected

Crude oil prices continued to rise on Wednesday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, are likely to meet in days ahead to review the output cut decision.

There are expectations that the cartel may decide on extending the duration of the curtailed production as Saudi Arabia has already proposed extending the output cut till the end of the year.

The August contract of Brent Crude on the Intercontinental Exchange (ICE) is currently trading at $40.13 per barrel, higher by 1.42 per cent from the previous close.

Futures of WTI crude in the US also maintained their gaining momentum. Its July contract on the NYMEX is currently trading at 2.39 per cent higher at $37.69 per barrel.

In the past one month crude oil prices have recovered on the back of the output cuts which came into effect on May 1 and gradual resumption of economic activities and lifting of lockdown restrictions across the world.

OPEC and its allies led by Russia had in April agreed to reduce output by 9.7 million barrels per day (bpd) for May and June, which market players expect to be extended.

The recent recovery in oil prices came after a freefall in April on concerns of decline in the storage capacity as supply surged although the demand remained nearly standstill. In April, the WTI crude fell below zero and turned negative for the first time ever owing to the lack of storage.