Oil prices rose early on Wednesday as OPEC's leader and top producer Saudi Arabia is looking to convince its key ally in the OPEC+ deal, Russia, to back a large collective production cut in Q2 in response to the slump in demand with the coronavirus outbreak.
At 9:00 a.m. EST on Wednesday, WTI Crude was trading up 1.89 percent at $48.12, and Brent Crude was rising 1.81 percent at $52.79, as ministers began to arrive in Vienna for this week's meeting.
Prices were also supported by a Fed rate cut on Tuesday and hopes that more central banks will react to slowing economies by easing monetary conditions.
Also on Tuesday, the American Petroleum Institute (API) estimated a smaller than anticipated crude oil inventory build of 1.7 million barrels for the week ending February 28, compared to analyst expectations of a 3.333-million-barrel build in inventory.
Before the EIA's weekly inventory report on Wednesday, oil prices were trading up as the market recovers from last week's carnage and hopes for a sizeable collective cut in Q2 from OPEC and its partners to support prices and try to prevent a global glut amid depressed oil demand.
The energy ministers of Saudi Arabia and Russia, Prince Abdulaziz bin Salman and Alexander Novak, respectively, are meeting on Wednesday afternoon in Vienna. The Saudis and OPEC seek a massive collective cut of more than 1 million bpd, yet "the challenge is still Russia," an OPEC source told Reuters.
Saudi Arabia wants the OPEC+ coalition to agree to a collective cut of more than 1 million bpd, delegates told Bloomberg on Wednesday.
Russia continues to refuse to officially announce its position regarding deeper cuts, but this weekend Russian President Vladimir Putin suggested that Moscow would continue to play ball and cooperate with OPEC, although it sees current oil prices as "acceptable."
The market has already priced in a cut of at least 600,000 bpd, so it's in the best interest of both OPEC and Russia to come to some sort of an agreement of a large cut to prevent another oil price slump.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More