Oil prices extended gains early on Wednesday as a storm continues to disrupt crude loadings in the Black Sea and the market awaits news about the next move from OPEC+ set to hold a meeting on Thursday.
Ahead of the weekly EIA inventory report, prices were supported by the industry report from API showing a small draw in U.S. commercial crude stockpiles and a drop in gasoline inventories, with Cushing inventories also down by 465,000 barrels last week, after rising by 640,000 barrels in the previous week.
Oil exports from the Black Sea remain disrupted on Wednesday as shipping continues to be restricted due to a storm in the region, further lending support to oil prices.
The storm has disrupted up to 2 million barrels per day (bpd) of oil exports from Kazakhstan and Russia, according to data from state officials and port agents cited by Reuters.
"The halt in loadings will weigh on output, with Kazakhstan's energy ministry already saying that output at its largest oil fields (Tengiz, Kashagan and Karachaganak) has been cut by 56%," ING strategists Warren Patterson and Ewa Manthey wrote in a note on Wednesday.
The strength in oil prices early on Wednesday follows a 2% gain on Tuesday when crude futures rose due to a weaker U.S. dollar and lower Treasury yields.
Market participants are eyeing Thursday's OPEC+ meeting with "still little clarity over whether OPEC+ has come to an agreement on production quotas," ING said.
If OPEC+ fails to reach a preliminary deal ahead of Thursday's meeting, there is a risk that the meeting could be delayed again, weighing down on oil prices, the bank's strategists added.
"The outlook for the oil market in 2024 will largely depend on OPEC+ policy," ING said.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More