Oil prices on track for 3rd monthly gain ahead of OPEC decision; Brent hits $87
International crude oil prices rebounded and rose by more than $1 per barrel on Thursday, March 28, after falling for two consecutive sessions ahead of the policy decision by the Organisation of Petroleum Exporting Countries (OPEC). Investors anticipated tighter supplies given the producer alliance is widely expected to stay the course on its current production cuts.
Brent crude futures for May were last up $1.21, or 1.4 per cent, at $87.30 per barrel, while the more actively traded June contract rose $1, or 1.2 per cent, to $86.41. The May contract expires on Thursday. US West Texas Intermediate (WTI) crude futures for May delivery were up $1.28, or 1.6 per cent, at $82.63 a barrel.
Both benchmarks were up more than two per cent on the week and were on track to finish higher for a third consecutive month, according to news agency Reuters. Coming to domestic prices, crude oil futures traded 1.76 per cent higher at ₹6,895 per barrel on the multi commodity exchange (MCX).
What’s pushing crude oil prices?
-In the previous session, oil prices had come under pressure from last week’s unexpected rise in US crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to Energy Information Administration (EIA) data.
-Analysts expect inventories to rise less than normal in reflection of the global oil market in a slight deficit. This will likely hand support to the Brent crude oil prices going forward. US refinery utilisation rates, which rose 0.9 percentage points last week, also supported prices.
-The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. US gross domestic product (GDP) increased at a 3.4 per cent annualized rate from the previously reported 3.2 per cent pace, said the Commerce Department’s Bureau of Economic Analysis.
-Investors will watch for cues from a meeting next week of the OPEC’s Joint Monitoring Ministerial Committee. Increased geopolitical risk has raised expectations of possible supply disruption, but OPEC is unlikely to make any oil output policy changes until a full ministerial gathering in June.
-Analysts do not see any indications that the recent run-up in prices due to the heightened Russian infrastructure risk will prompt any policy reversal at next week’s OPEC meeting. Any serious shift will likely have to wait until the June 1 ministerial meeting, and even then, experts say the group will be very judicious when it comes to unwinding any cuts.
Also Read: Explained | Why did OPEC+ members extend oil output cuts to mid-2024
Where are prices headed?
Analysts say that crude oil continues to trade firm despite a larger than expected build in weekly crude oil and gasoline inventories, as sentiments remained supported by additional supply cuts from Russia in compliance with the OPEC+ pledged cuts.
‘’Also sentiments still remains upbeat due to geo-political risk premium prevailing in the market. ‘’Technically, trend remains positive till support at 6,750/ 6,690 is not breached, while on the higher side resistance is seen at 6,920,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates & Live Business News.
Published: 28 Mar 2024, 10:30 PM IST
