Oil prices surged by more than $1 per barrel on Thursday, rebounding from two consecutive sessions of decline, amidst expectations of stable supplies as the OPEC+ alliance is poised to maintain current production cuts.
At 1:28 p.m. EDT (1728 GMT), Brent crude futures for May soared by $1.30, or 1.5%, reaching $87.39 a barrel. Meanwhile, the June contract, which saw more active trading, climbed $1.22, or 1.4%, to $86.43 at the same time. Notably, the May contract is set to expire on Thursday.
U.S. West Texas Intermediate (WTI) crude futures for May delivery experienced a robust uptick of $1.43, or 1.8%, hitting $82.78 per barrel.
Both Brent and WTI benchmarks enjoyed gains exceeding 2% for the week, on course to mark a third consecutive month of increases.
Earlier, oil prices faced pressure following last week’s unexpected uptick in U.S. crude oil and gasoline inventories, driven by elevated crude imports and subdued gasoline demand, as per data from the Energy Information Administration.
Nonetheless, the increase in crude stock was less significant than projected by the American Petroleum Institute, with analysts noting it was below seasonal expectations.
“We… anticipate U.S. inventories to exhibit lower-than-normal increases, reflecting a global oil market hovering in a slight deficit,” remarked SEB analyst Bjarne Schieldrop. “This is likely to lend support to Brent crude oil prices in the future.”
Furthermore, the uptick in U.S. refinery utilization rates last week provided additional support to prices.
Meanwhile, the U.S. economy’s fourth-quarter growth surpassed previous estimates, with the Commerce Department’s Bureau of Economic Analysis reporting a 3.4% annualized increase compared to the previously reported 3.2%.
“The robust performance in the stock market implies optimistic future earnings, which, in turn, suggest a surprisingly robust U.S. economy conducive to better-than-expected demand for energy products,” observed Jim Ritterbusch of energy consultancy Ritterbusch and Associates.
Inflation data further bolstered the case for the U.S. Federal Reserve to delay cutting its short-term interest rate target, according to a Fed governor, although the possibility of rate reductions later in the year remains open.
Investors are closely monitoring next week’s meeting of the Joint Monitoring Ministerial Committee of the OPEC, seeking insights into potential supply adjustments. While geopolitical tensions have heightened expectations of supply disruptions, OPEC+ is unlikely to revise its oil output policies until a full ministerial gathering in June.
Recent attacks by Ukraine on Russian energy infrastructure have contributed to the perception of tightening global crude supplies, supporting oil prices, noted John Kilduff, partner at Again Capital LLC.
“It’s a prime target, and they appear to have not heeded the ask by the Biden administration to not attack Russian energy infrastructure,” Kilduff remarked.