Oil prices inch up ahead of OPEC+ meeting

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MELBOURNE- Oil prices crawled higher on Tuesday, with traders waiting to see whether major producers agree to extend their huge output cuts to shore up prices at a meeting expected later this week.

Brent crude futures rose 0.4 percent, or 17 cents, to $38.49 a barrel. West Texas Intermediate (WTI) crude futures traded in a 38-cent range on either side of Monday’s close, and last traded unchanged at $35.44 a barrel.

Brent has doubled over the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and allies, including Russia, a grouping dubbed OPEC+.

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Both Brent and WTI prices are still down about 40 percent for the year so far.

“The whole story is very much based around the supply cuts and the demand recovery,” said Commonwealth Bank commodities analyst Vivek Dhar.

OPEC+ producers are considering extending their output cut of 9.7 million barrels per day (bpd), about 10 percent of global production, into July or August, at an online meeting likely to be held on June 4.

Under the OPEC+ plan agreed in April, the record supply cut was to be for May and June, scaling back to a cut of 7.7 million bpd from July through December. Saudi Arabia has been leading talks to push for extending the heftier cuts, sources told Reuters last week.

An agreement to extend the larger cut could push oil prices to $40, but the market would need to see follow-through on that commitment to sustain higher prices, Dhar said.

A drop in crude stockpiles at Cushing, Oklahoma, which fell to 54.3 million barrels in the week to May 29, also buoyed prices, traders said, citing a Genscape report on Monday.

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