Oil Prices Surge on OPEC+ Production Cuts and Geopolitical Tensions
Oil Prices Reach New Highs
Oil prices experienced a significant increase, with Brent crude futures settling at $87.48 a barrel, the highest level since October 27. This surge was driven by the possibility of OPEC+ maintaining production cuts, ongoing attacks on Russia’s energy infrastructure, and a decline in the U.S. rig count, which has tightened crude supplies.
Market Trends and Analysis
The more actively traded June contract also saw a rise, settling at $87 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for May delivery settled at $83.17 a barrel. Both Brent and WTI prices saw a weekly increase, with Brent rising by 2.4% and WTI by about 3.2%, marking the third consecutive month of gains.
Factors Influencing Prices
Despite a previous increase in oil and gasoline inventories, the market remained optimistic. Analysts pointed out that the rise was lower than expected for the time of year, indicating a global oil market in a slight deficit. Additionally, U.S. refinery utilization rates and a decrease in the oil and gas rig count contributed to the price uptick.
Economic Indicators and Impact on Oil Demand
The U.S. economy’s growth rate surpassed previous estimates in the fourth quarter, reflecting positively on energy product demand. Inflation data also supported the case for the Federal Reserve to maintain its interest rate target, which could further bolster oil demand.
Geopolitical Tensions and Supply Concerns
Attacks on Russian energy infrastructure by Ukraine have heightened concerns about global crude supplies, contributing to the rise in oil prices. The geopolitical risks and potential supply disruptions have added to the market sentiment and supported the upward trend in prices.
