Oil Prices Edge Up as Markets Await OPEC+ Decision
Oil Prices on the Rise
Oil prices inched up on Friday, set to end the week with a modest increase, as markets eagerly awaited an OPEC+ decision on supply agreements for the second quarter. This decision comes amidst varying demand indicators from key consumers like the U.S. and China.
Positive Movement in Oil Futures
Brent futures for May saw a 0.38% increase, reaching $82.22 a barrel, while U.S. West Texas Intermediate (WTI) for April rose by 0.31% to $78.50. WTI is expected to see a 2.5% rise this week, with Brent holding steady near last week’s closing price, comfortably above the $80 mark for three weeks.
Market Analysis and Expectations
Analysts from BMI noted that prices remained stable this week, with Brent showing strength around $83/bbl despite oversupply concerns. Expectations of continued OPEC+ production cuts into Q2 2024 are influencing market sentiment. The widening timespreads for Brent futures contracts indicate a shift towards stronger backwardation, supporting a more bullish outlook on prices in the coming months.
OPEC+ Production and Market Impact
A Reuters survey revealed that OPEC pumped 26.42 million barrels per day in February, a slight increase from January. The decision on extending production cuts is expected in early March, with Saudi-led OPEC+ likely to continue the cuts till the end of 2024, keeping oil prices above $80/bbl.
Global Economic Factors
Factors such as China’s manufacturing activity contraction and the U.S. Federal Reserve’s inflation gauge are influencing oil prices. While China faces challenges in its manufacturing sector, the U.S. inflation index is in line with expectations, potentially leading to an interest rate cut and increased consumer spending on fuel.
Market Outlook and Projections
Analysts from DBS Bank anticipate fluctuations in oil prices in the second quarter before a rebound in the second half of 2024. The potential for a rate cut scenario may boost fund flows towards riskier assets, impacting oil prices in the coming months.
