Oil Holds Gain as OPEC+ Bets Market Can Absorb Returning Supply

Oil was steady in early Asian trading after OPEC+ confirmed it would proceed with plans to add more barrels to the market, despite a virus resurgence in some regions including India clouding the demand outlook.

Futures in New York traded near $63 a barrel after advancing the most in almost two weeks on Tuesday. An OPEC+ committee agreed that the alliance should press ahead with its road map for increasing supply over the next three months. The coalition raised its estimates for demand growth this year on Monday, while BP (NYSE:BP) Plc also pointed to signs of a robust recovery.

The global oil market recovery is being driven by China and the U.S., with positive signs emerging from parts of Europe. An accelerating vaccination program is expected to increase consumption further, although crude prices have whipsawed near $60 a barrel recently as Covid-19 flare-ups in India and Brazil raised concerns about near-term demand.

OPEC+ will skip its scheduled ministerial meeting on Wednesday after sticking with its plan to hike supply by 2 million barrels a day over the next three months, according to delegates. The next gathering will be in early June, a delegate said, asking not to be identified as the information isn’t public.

The prompt timespread for Brent was 55 cents in backwardation — a bullish market structure where near-dated contracts are more expensive than later-dated ones — on Tuesday. That’s down from 69 cents at the end of last week.

The American Petroleum Institute, meanwhile, reported U.S. crude stockpiles expanded by 4.32 million barrels last week, according to people familiar with the data. If confirmed by government figures Wednesday, it would be a second straight weekly gain. The API reported a drop in gasoline inventories.