Mar 28 2024: Oil prices experienced an upward trend on Thursday after two consecutive days of decline, driven by investor expectations of tighter supplies. This anticipation stems from the consensus that the OPEC+ producer alliance will maintain its current production cuts.
Brent crude futures for May climbed by $1.23, or 1.4%, reaching $87.32 per barrel, while the more actively traded June contract saw an increase of 90 cents, or 1.1%, to $86.31 by 1348 GMT. The May contract was set to expire on Thursday.
Similarly, U.S. West Texas Intermediate (WTI) crude futures for May delivery rose by $1.03, or 1.3%, reaching $82.38 per barrel.
Both Brent and WTI benchmarks were poised to conclude the month with gains for the third consecutive time.
The recent pressure on oil prices, observed in the previous session, was attributed to an unexpected rise in U.S. crude oil and gasoline inventories. This increase was driven by a rise in crude imports and subdued gasoline demand, according to Energy Information Administration data.
However, analysts noted that the increase in crude stocks was lower than anticipated for this time of year, reflecting a global oil market that is slightly in deficit.
SEB analyst Bjarne Schieldrop stated, “We … expect U.S. inventories to rise less than normal in reflection of a global oil market in a slight deficit. This will likely hand support to the Brent crude oil price going forward.”
Moreover, the rise in U.S. refinery utilization rates also contributed to supporting oil prices.
Market sentiment regarding inflation data suggested that the U.S. Federal Reserve may delay cutting its short-term interest rate target, which typically supports oil demand. Analysts at JPMorgan noted expectations for rate cuts from both the Fed and the European Central Bank, potentially starting in June.
Investors are closely monitoring the upcoming meeting of the Joint Monitoring Ministerial Committee of the Organization of the Petroleum Exporting Countries (OPEC) next week. While geopolitical risks may impact supply, OPEC+ is not expected to make significant oil output policy changes until the ministerial meeting in June.