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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading nearly flat on Thursday as traders await a major policy decision from OPEC and its allies later today. Volume is also on the light side as many of the major commodity funds have taken to the sidelines ahead of the long Easter holiday weekend.

At 11:48 GMT, May WTI crude oil futures are trading $59.30, up $0.14 or +0.24% and June Brent crude oil is at $62.79, up $0.05 or +0.08%.

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OPEC+ Meets to Decide on Production Levels amid Renewed Demand Concerns

OPEC and its allies are scheduled to meet at 12:00 GMT to decide on the next phase of its production policy.

The current agreement is cutting just over 7 million barrels per day in an attempt to stabilize prices and reduce oversupply. Additionally, Saudi Arabia has voluntarily added an additional 1 million barrels per day to those cuts.

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Eurasia Group Predicts Outcome of Meeting

Analysts at Eurasia Group said the most likely outcome for the OPEC+ meeting is for the group to keep production unchanged from April and for Saudi Arabia to continue to withhold its additional 1 million barrels per day – although it may taper this slightly by 100,000 barrels “to signal its willingness to adjust.”

They noted that the last month in global oil markets “featured a significant level of volatility” and a sell-off that brought Brent crude futures down to $62 a barrel from $70, before stabilizing around $64 in recent days.

“The Suez Canal incident probably helped many oil producers, as it prevented a further slide in prices,” analysts at Eurasia Group said in a research note published Wednesday.

“Once again, it is far from clear that a sustainable recovery would justify a strong cycle of OPEC+ tapering to be followed each month. Saudi Arabia’s caution about the global economic recovery was in many respects warranted,” they added.

Need to Remain “Extremely Cautious”

Ahead of the meeting, OPEC Secretary-General Mohammed Barkindo stressed the need “to remain very cautious” as a result of ongoing uncertainties and fragility caused by the coronavirus pandemic.

Similarly, Saudi Arabia has previously encouraged allied partners to remain “extremely cautious” on production policy, warning the group against complacency as it seeks to ensure a full oil market recovery.

Meanwhile, two unnamed OPEC+ sources told Reuters that an increase in oil production at Thursday’s meeting would not exceed 0.5 million barrels. CNBC was not able to independently verify these sources.

For a look at all of today’s economic events, check out our economic calendar.
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